Is my equity package fair? How to actually tell

It's the question every manager asks and almost nobody can answer from their own vantage point: is my package normal? You've seen one deal — yours. The people across the table have seen fifty. This guide is about closing that information gap honestly.

Why the headline percentage misleads

"I have 3%" tells you almost nothing by itself. The same 3% can be a life-changing position or a decorative one depending on:

1. The structure above it. How large is the loan-note and preference stack, at what rolled-up rate, and what does the waterfall leave for ordinary equity at realistic exit values? (Our exit waterfall guide walks the arithmetic.)
2. What you paid, versus what it's worth. Sweet equity's whole point is favourable entry pricing — the envy ratio question. A larger percentage bought at full freight can be a worse deal than a smaller sweetened one.
3. The downside drafting. Leaver provisions, reverse ratchets and vesting decide what you keep in the scenarios nobody likes discussing. A generous percentage with resignation-as-bad-leaver drafting is a very specific kind of generous.
4. The upside drafting. Positive ratchets, anti-dilution behaviour at future funding rounds, and acceleration on exit all add value that never shows in the headline number.
5. The tax wrapper. EMI versus unapproved, growth-share hurdles, s431 elections, BADR eligibility — after-tax is the only number your bank account meets.

What "benchmarking" means when it's done properly

Fair comparison needs deals like yours: similar sector, similar company size, similar role, similar structure. It also needs honesty about the data — a benchmark built on three deals is an anecdote wearing a suit. That's why credible benchmarks disclose their cohort sizes and suppress thin cohorts entirely rather than presenting noise as insight.

The comparisons that actually move conversations with investors: total management pool size for the company's stage; your share of that pool for your role; entry pricing relative to the institutional money (envy ratio); leaver and vesting norms; and ratchet thresholds against the fund's base case.

Using the answer

"Fair" isn't a verdict, it's a negotiating position. Packages get revisited at new investment rounds, refinancings and promotions — the moments when knowing that your leaver terms sit in the market's tough tail, or that your pool share is a point light for your role, converts from grievance into a specific, evidenced ask. And where the numbers are large or the drafting unusual, a solicitor or adviser who lives in management-equity work will know what the current market bears better than any static guide can.

FAQ

What's a typical management pool in a PE deal?

Published surveys tend to put management ordinary-equity pools in the broad range of 10–20% for mid-market buyouts, varying with deal size, sector and how much management co-invests — but ranges this wide are exactly why like-for-like benchmarking beats rules of thumb.

Can I ask my investor how my package compares?

You can — and well-run houses expect the question at the right moments (new money, promotions). Arriving with specific, evidenced comparisons changes the conversation's quality entirely.

When is a package worth professional review?

Before signing anything at a new deal or refinancing; when leaver or ratchet drafting looks unusual against guides like these; and whenever the sums involved make an hour of specialist time trivially cheap insurance. Equity documents are far easier to improve before signature than after.