Align the management team with value creation.
We design and negotiate management incentive plans for M&A transactions — to retain key talent, align interests and ensure the executive team is pulling in the same direction as shareholders.
Who is this service for?
- →PE fund wanting to retain management after an acquisition
- →Pre-sale company needing to lock in the executive team during the process
- →Family business wanting to reward and incentivise key external executives
- →Management team entering a leveraged buyout and negotiating their stake
"Without the MIP, the management team would never have aligned their interests with ours. It was the difference between having employees and having partners."
Management incentive plans are one of the most powerful mechanisms for managing the retention, alignment and potential conflict of interest that can arise in an M&A transaction. A well-built MIP transforms the relationship between shareholders and executives: it stops being an employer-employee relationship and becomes an alliance with aligned interests. A poorly designed MIP generates conflict, frustrated expectations and the departure of the talent it was meant to retain.
At Dextra, we have advised on the design and negotiation of MIPs from every angle. We have negotiated them as investors in our own portfolio companies (Gemba Private Equity), we have advised on them as part of sale processes where management was a critical factor in value, and we have mediated when differences between a fund and executives threatened to block a deal. That multi-dimensional experience is what we bring to the table when advising on plan design.
Technical design matters, but negotiation matters more. A MIP that is technically correct but perceived as unfair by the executive will not fulfil its function. Our job is to find the balance between the shareholder’s interests — maximising returns — and the executive’s interests — receiving attractive, predictable compensation, aligned with value creation for all shareholders — so the plan becomes a value catalyst, not a source of tension.
The process, step by step.
Transaction and management team analysis
We understand the deal structure, each executive's role, their expectations and the fund's or shareholder's investment horizon. MIP design always starts from this analysis.
Plan design
We define the MIP structure: instruments (options, shares, phantom shares), vesting triggers (EBITDA, IRR, investment multiple), vesting periods and good leaver / bad leaver conditions.
Financial modelling
We build the MIP financial model to simulate expected payments under different exit scenarios: what each executive earns as a function of exit price and fund returns.
Negotiation between shareholders and management
We mediate between the fund or company and the management team to reach an agreement both parties perceive as fair — the necessary condition for the MIP to fulfil its motivating function.
Legal documentation
We coordinate with legal advisors on MIP documentation: management agreement, shareholders' agreement, option or phantom share contracts, and good leaver / bad leaver provisions.
Monitoring during the incentive period
We advise the fund and management throughout the MIP's life: tracking metric performance, adjusting for corporate events and preparing for the exit.
What makes us different.
Experience as investors and sellers
We have designed MIPs in our own investments (Gemba, Atalaya) and negotiated them from both sides. We know what works in practice and what generates conflicts down the line.
100% senior execution
Stephan Koen and Iker Zabalza lead negotiations directly. The trust created by dealing with founding partners — not a junior M&A team — accelerates the process and improves the outcome.
Integrated M&A view
The MIP is not designed in isolation: it is part of the deal structure. Our holistic view of the transaction — valuation, financing, governance — lets us design plans that fit the reality of each deal.
A MIP is an economic incentive plan designed to align the management team with shareholder objectives in an M&A or private investment context. The executive receives a share of the value created — typically at exit — if certain return objectives are met. The logic is simple: if the fund wins, management wins; if no value is created, there is no payment.
Ideally, before closing the acquisition or within the first months after closing. Designing it late — when relationships are established and expectations set — complicates negotiation. Most commonly, the MIP forms part of the shareholders' agreement negotiated alongside the SPA.
It depends on the chosen structure. In a typical model, the executive receives a percentage of value created above a minimum return threshold (hurdle rate) for the shareholder. The financial model simulates payments under different exit price scenarios so both the fund and management understand exactly what to expect.
It depends on whether the departure is voluntary or involuntary and whether it is classified as a good leaver or bad leaver event. A good leaver — for example, dismissal without cause — typically retains the vested portion of the MIP. A bad leaver — voluntary resignation or dismissal for cause — may forfeit all or part of the plan. These provisions are negotiated upfront and are critical to the MIP fulfilling its retention function.
Yes, and they are significant. MIP taxation varies depending on the instrument chosen (share options, phantom shares, actual equity interests) and the timing of the benefit. In Spain, employment income is taxed at marginal rates while capital gains benefit from more favourable treatment. Tax structuring of the plan is part of the advisory we provide.
Yes. MIPs are not exclusive to private equity. We also advise family businesses wanting to incentivise key external executives, companies in a sale process that need to retain the management team, and companies wanting to implement a structured profit-sharing plan as an alternative to conventional variable pay.
Next step
Shall we talk about
your deal?
Founding partners respond directly. No intermediaries.