Business · Companies · 2 hrs ago

Private equity firms use executive incentives to support growth and exits

Private equity firms use executive incentives to support growth and exits

Private equity firms in India are increasingly using structured incentives to reward leaders at companies they own.

These payments come on top of executives’ salaries and can give them a share in the company’s gains.

Some plans link payouts to returns when investors sell their stake, so executives benefit if the investment meets agreed targets.

The approach is gaining importance as firms pursue larger buyouts and build platforms by combining businesses.

The incentives can help attract and retain senior leaders to manage operations, integrate acquisitions and expand the business.

Investors want executives focused on building lasting value, while sharing in the financial outcome at exit; no specific next step is given.

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What people are saying

Abhishek GuhaPartner, corporate practice, Trilegal
These incentive mechanisms ensure that the management team stays motivated as they get to participate in the wealth creation when a financial sponsor achieves its preferred return benchmark
via Mint
Bettina SiempelkampHead of Global Network Talent, EQT
What has changed is how systematic it has become. Our starting point is that management quality is one of most-cited drivers of deal success, and that acting too late on talent is a very common reason deals underperform
via Mint