Corporate Governance Behind a German MEP is Complex Than the Deal Itself

They align management incentives with shareholder returns and have become a standard part of deal structuring in Germany. They are also one of the most administratively complex instruments to set up and maintain correctly.

A German MEP often involves separate investment vehicles through which management co-invests alongside the fund. These vehicles need to be incorporated, governed, and maintained as properly governed legal entities throughout the investment period. The managing directors of MEP vehicles carry legal responsibilities under German law. Share transfers, option exercises, good leaver and bad leaver provisions, and eventual exit waterfall calculations all generate corporate documentation that needs to be accurate and complete.

When it comes to exit, any gaps in that documentation create problems. Tax authorities and acquirer due diligence teams look closely at MEP structures.

We provide full corporate services support for management equity vehicles as part of our private equity offering. We establish the MEP entities, provide qualified managing directors, maintain all corporate records throughout the investment period, and manage the documentation associated with any changes in the management team or the structure itself.

Clean MEP governance protects the fund, the management team, and the deal.