I'm looking to join a PE backed company as CEO. The company was acquired 4 years ago. I would be looking at a 3-5 year job through the exit. The salary/bonus seems right. The equity 'bonus' would be calculated based on the exit enterprise value. I've never work with PE companies in the past. Can someone help a newbie with a few questions? - As CEO, what % would be 'average' for the equity bonus? - Enterprise value is EBITDA x multiplier? - What is the average multiplier range for an industrial machinery company? ANY help would be very much appreciated.
CEO equity bonus based on exit enterprise value and other questions
Answers
Answers, not exactly in order:
Enterprise value is calculated as the market capitalization (is calculated by multiplying a company's shares outstanding by the current market price of one share) plus debt, minority interest (no controlling shareholders investment) and preferred shares, minus total cash and cash equivalents.
Multiplier could be 4 - 5 (see http://www.orioncg.com/multiplier.php) but can vary
As far as %, I'd say there is no "average" there is how much they a) want you, b) what you can bring to the table and c) how far you think you can move the needle.
Also, what's important, cash now of potential cash later, because I'm sure the total deal would hinge on each aspect of your compensation package. Don't forget golden parachute and separation agreement.