Management teams are often compensated with performance-based stock options to encourage 110% effort while owned by the PE sponsors. Even private companies can award these contracts.
However, what happens to the sponsor's equity? How badly can they be diluted?
The Treasury Stock Method can be overwhelming at first, as always take a second to really thing about what is trying to be accomplished here. We are looking to see what type of contract we can award management to keep them motivated, while avoiding excess dilution to our ownership.
Goal: complete the template in under 45 minutes, model from a blank sheet in under 1 hour. Try to summarize in 3 sentences or less why this would or would not be a good investment purely based on the output of the model.
Steps:
The_Pulse_LBO_Model_Stock_Option_Prompt.docx
The_Pulse_LBO_Model_Stock_Options.xlsx
The_Pulse_LBO_Model_Stock_Options_Answer.xlsx
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