Ratchets Definition | Legal Glossary | LexisNexis
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GLOSSARY

Ratchets definition

What does Ratchets mean?

A structure that determines the eventual equity allocation between groups of shareholders. A ratchet enables a management team to increase its share of equity in a company if the company is performing well. The equity allocation in a company varies, depending on the performance of the company and the rate of return that the private equity firm achieves.

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