Consensual Enterprise Project

The basis for any NewCode transformation is the establishment of a Consensual Enterprise Project (CEP), where human and financial Capital agree on the target future of the enterprise and commit themselves accordingly.

The CEP contains all components usually associated with strategic and business planning in terms of perimeter, capex, sales and non personal costs projections. It also includes projections for the compensation of both financial and human capital, e.g. the way added value will be shared between human and financial capital should the Enterprise perform according to the CEP.

The CEP is also a major input for the sizing and design of the Capital Structure, e.g. the Capital Structure has to provide the capital resources needed by the CEP, and conversely CEP metrics have to allow the service of the Capital Structure and its refinancing at maturity.

The CEP provides the base case for the design of the Value Sharing Mechanism, and also for the Downside Management Mechanism which will come into play should the enterprise perform significantly below the base case.

The management team is in charge of drafting the CEP. Governance is in charge of achieving a consensus on the CEP, between management, employee representatives and investors.

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CONSENSUAL ENTERPRISE PROJECT

The strategic project, prepared by the management team, is discussed with the investor and the employee representatives. The adherence of the social body to the project is an essential condition. It forces stakeholders - investors, managers, employees - to develop a shared vision of the future and to put in place a business plan of reference.

CAPITAL STRUCTURE

The equity investor holds a financial instrument - "NewCode Instrument" - which replaces the ordinary shares, entitles the holder to a fixed interest and a share of the value created. The NewCode instrument presents an intermediate risk-reward profile between equities and bonds.

VALUE SHARING

Value created is shared between human and financial capital in proportions originally planned in the NewCode agreement. Value sharing occurs during the execution of the plan (bonuses, profit-sharing, dividends) and / or during refinancing operations (crystallization and distribution of value).

DOWNSIDE MANAGEMENT MECHANISM

It is the counterpart to the contracting of the investor's remuneration. The processes of adaptation of the company in case of underperformance are anticipated and documented in the NewCode agreement. This anticipation clarifies in advance the rules of the game and empowers employees to protect the operational performance of the company.

GOVERNANCE

Management representatives, investors, outside directors and employee representatives participate in the governance of the company. Well aware of the realities of the company, they participate, upstream of the decisions, in the debates on the strategic plan, sharing with the other directors their operational knowledge of the company, its markets as well as the performance factors of the organization.