Comp occupies plenty of CFO and managing partner headspace. A market downturn, when expectations of carried interest gains are downgraded or pushed back, is a good time to consider whether the current system is working for you and your execs.
If you’re looking for new ideas, corporate venture capital units (CVCs) could provide food for thought. Notably these groups don’t necessarily want to incentivise a speedy exit and so, according to research from MM&K, frequently opt for a money multiple hurdle rather than an IRR. As investment time horizons get pushed out by the current economic malaise, perhaps this should become more common among PE firms. Read the article here.
Email prepared by Toby Mitchenall.