Doughty Hanson, one of the pioneers of Europe's private equity industry, is forging ahead after the death of one of its co-founders with a new LLP structure that will see its employees taking interests in the firm.
While Doughty Hanson will retain its current company structure, by the time it hits the road with its sixth fund the buyout house will undergo the restructure. The firm will become a UK-registered limited liability partnership but will remain an onshore tax resident.
The change of direction follows the unexpected death of Nigel Doughty, the owner of Nottingham Forest FC who suffered a suspected heart attack at his home in February.
Doughty met Richard Hanson when the pair worked at Standard Chartered in the 1980s, tasked with establishing the bank's European buyout division. They then decided to go it alone in 1995, creating one of the first independent houses in the UK.
The new structure has been adopted to give employees a share in the company's equity, further aligning interests with its limited partners, according to a press release.
It will join a list of private equity names who have adopted the LLP status in recent months, including Dunedin Capital Partners, Cinven and Duke Street.
According to a lawyer who asked not to be named, participants in LLPs do not have to make National Insurance contributions and research from RKG Consulting indicates that this can save around 13 per cent on an equivalent salary or bonus. However, participants must also forgo employee benefits in the process. Doughty Hanson said the new arrangement will not bring tax advantages.
“While borne out of very sad circumstances, we believe that operating the new group structure and existing Doughty Hanson funds in parallel provides the best way to ensure we deliver value for new and existing investors, while positioning the company to grow and evolve in the future,” said chief executive Stephen Marquardt in a statement.
“We are certain, as well, that it will ensure we retain and incentivise the best talent to deliver returns for our investors.”
Nigel Doughty took the role as assistant treasurer for the Labour Party and was a significant donor, contributing £2m from his own pocket in the run-up to the 2010 general election.
He is also thought to have urged Labour to explore a more progressive tax system that would have seen he and his peers putting more money in the public purse.