However this study presents a faulty methodologyIn short a triple ban to be lazy or negligentBut to focus solely on them causes two risksThis is the first vegetable consumed in the worldsaid Vincent Baudelet. For the time being They are stuck summarizes a European expertBut it is very likely that once the vote is passed the Center bubble deflatesHowever this is only a part of the projectAnd it is already declining in many developed countriesStrike hardFixed ambition is high Nicolas Sarkozy wants to strike hardThe LBO, this is a case of big money. For the Fund investment for lenders bankers but for managers. Recently, the France has been a phenomenon not shared in Europe, namely the inflation of the remuneration of managers. Indeed, their well garnished pools and strong competition, some funds have seen in the package management tool of differentiation to win membership of the management team and, a fortiori, the auction process. The increase was also maintained by the rise of the new generation LBO. More armed in a second LBO, the management better defends its interests so it is recommended that more and more often. But if everyone admits that with the risk taken, the manager must have a premium, some mistakes were shocked, and it within the same teams.
Denouncing such practices as soon as their appearance, Benoît Bassi, President of Bridgepoint in Paris, which owns among other "the monitor" or the Moliflor leisure casinos, sees, with satisfaction, the market is calm. "The increase of the packages was a French exception which tends to disappear." It aligns the practice of our European neighbours.
Two patterns are opposed
But if the increase in stalls, the principles remain. The image of the golden rule of the alignment of interests between the Fund and the leader. The remuneration scheme distinguishes key men gathered in the "circle 1" which usually has between one and five people and other executives members of the "circle 2", strong ten maximum employees (read interview below). By participating financially in the LBO, manager aborts his cap of an employee in favour of the investor. Conduct strictly examined by the tax authorities, because it determines the capital gains tax rate. "The gain of manager is the result of a co-investment.". "It only resembles not a bonus", said Christian Couderc, associated tax firm's coat-Thomas-Couderc.
The schema to be legally impeccable, it must therefore be based on actual risk taking. It must be assessed quantitatively. No standard is required, but the practice normalizes. In a "buy out" primary, the manager put between one and two years of net salary after tax to hold around 10 on average. In a secondary LBO it taken between 40 and 70 of its net capital gain to be sometimes award up to 30 of the capital. "Leaders can contract a loan affording guarantees low." But it is not recommended them to mortgage their house! ", explains David Pariente, associated coat-Thomas-Couderc.
Technically, both schemas are opposed. "Dilution mechanism allows managers to hold of at the outset a significant share of the capital." When the business plan is not reached, funds convert their obligations and dilute the participation of leaders, he says. The accretive mechanism provides leaders the opportunity to increase their participation through the exercise of warrants (BSA) autonomous or attached to actions. To date, it is the most common schema.
The risk management gauge also qualitatively. Its investment must be a market value; his gain must result from the realization of financial performance. Manager accesses a fraction of the added value generated by the Fund, provided that the latter carries out the internal rate of return (IRR) or the last multiple planned (see graphic). This formula, called "ratchet", often combines sorting and multiple. "The threshold is 20, the equivalent of a multiple of two times the costs", said Louis Huetz, associated with the Aforge Finance financial advisory boutique. Failure of the business plan, the manager faces the deadweight loss of its investment. "The Pact of specific shareholders also the conditions of surrender if the leader leaves the company before the unwinding of the LBO." "If it is"bad leaver", i.e. If it is going to fault or fraud, it may lose everything", adds David de Pariente. For package management, the side of caution is not prejudicial. More and more tax controls and recovering these montages. In General, the parties reached an agreement without going to a contentious action.
