Deal bonus for IPO counsel

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SmokeytheBear
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Deal bonus for IPO counsel

Post by SmokeytheBear » Thu Jan 28, 2021 11:52 am

It's been a minute. Apologies for my absense the last couple of years. I've moved, started a family, etc etc. Life got busy.

Life may be getting busier.

Does anyone know what common practice is for in house counsel as it relates to deal bonuses, specifically around taking a company to and through an IPO? I never did an IPO while at a firm, so I don't know what's common in that sense. My boss (our GC) has recently told me that she wants me to run the IPO from the legal side, working with our strategic finance team and our outside advisors. We're also about to have my normal course performance review, so I want to make sure I go into the meeting knowing what's possible.

Any insight is helpful. thanks.

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Danger Zone
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Re: Deal bonus for IPO counsel

Post by Danger Zone » Thu Jan 28, 2021 12:59 pm

There’s definitely no one size fits all answer here, outcomes vary GREATLY. Depends on your experience (both with the company and prior), their commitment to making sure you stay, the results of the IPO. This uncertainty also works in your favor since you should be able to sweeten the deal for yourself if they present a package that you’re unhappy with.

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SmokeytheBear
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Re: Deal bonus for IPO counsel

Post by SmokeytheBear » Thu Jan 28, 2021 1:12 pm

So you're saying indeed a deal bonus is standard, it's just the size varies. I assume it varies both on the cash and equity side. would love to see some data points if people have them.

CompGuy

Re: Deal bonus for IPO counsel

Post by CompGuy » Fri Jan 29, 2021 12:02 am

I do exec comp work. A transaction bonus would be standard for key employees. Of course, who the top brass views as key varies greatly. It's also really hard to give too much insight into the bonus size, because it can depend on the industry, size of the company, and, of course, internal politics, among other factors. If you're the deputy/associate GC/the equivalent, asking for $25,000-$50,000 seems like fair game.

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SmokeytheBear
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Re: Deal bonus for IPO counsel

Post by SmokeytheBear » Fri Jan 29, 2021 5:21 pm

CompGuy wrote:
Fri Jan 29, 2021 12:02 am
I do exec comp work. A transaction bonus would be standard for key employees. Of course, who the top brass views as key varies greatly. It's also really hard to give too much insight into the bonus size, because it can depend on the industry, size of the company, and, of course, internal politics, among other factors. If you're the deputy/associate GC/the equivalent, asking for $25,000-$50,000 seems like fair game.
Huh. That seems low compared to deal bonuses I've seen on M&A deals. And no increased equity as a deal bonus?

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Danger Zone
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Re: Deal bonus for IPO counsel

Post by Danger Zone » Fri Jan 29, 2021 6:32 pm

That also struck me as on the low end, but my experience with exec comp is more commonly in private m&a transactions than an IPO (although you’d think the bonuses would be similar)

CompGuy

Re: Deal bonus for IPO counsel

Post by CompGuy » Sat Jan 30, 2021 4:47 am

It really does depend on the company size, sector, etc. I'm working with a few assumptions here. First (a guess), I'm assuming the market cap is <$300M (i.e. micro-cap). Second (a fact), I'm assuming that Smokey is not top brass. In IPOs of the size that I'm talking about, I've frequently seen transaction bonuses of $50,000-$100,000 for CEOs, CFOs, etc. These folks often have compensation packages that would put them at $350,000-$1,000,000/yr., assuming they receive 100% of their target bonus. I'd be expecting Smokeys C-Suite/VP-level employees to be getting $50,000-$100,000 as a deal bonus. Knock half of that for Director-level employees, and we land at my $25,000-$50,000 range being a reasonable ask. If, however, you think you're considerably more valuable than I'm getting at, the market cap of your company is considerably larger than micro-cap, etc., then I'd so feel free to ask for more. Most of the IPO payday money is made in equity grants anyway.

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SmokeytheBear
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Re: Deal bonus for IPO counsel

Post by SmokeytheBear » Sun Jan 31, 2021 4:48 pm

Indeed not top brass, but VP level. And our cap is and will be far, far larger than the 300m assumption. Very helpful. Thanks for the insight.

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