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Sweet equity

Also called: sweet equity, management equity

In one line

Equity on favourable terms given to management in a private-equity-backed company, geared to outperform if the business does well.

In plain English

In European buyouts, managers often get 'sweet equity' — shares structured to deliver outsized returns above a hurdle, aligning them with the investors. It's a management-level instrument.

If you were explaining it to a 5-year-old

Extra-rewarding toys given to the club's leaders that pay off big if the club does really well.

Why it matters when you sell

If you hold sweet equity, its hurdle and terms determine when it pays and what a sale would be worth.

Related terms

Growth shares (UK)Carried interestManagement incentive plan (MIP)Liquidation preference

Put it to use

How to get liquidity (Europe)

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.