Deal StructureHuman Capital
The Black-Box Promise
Also known as: Undefined equity promise, undocumented incentive, phantom allocation
TO-original framework. When someone offers you a percentage of something they won't define, the percentage is a distraction. The value is whatever they decide it is, whenever they decide to tell you.
WHY IT MATTERS
Introduced in D.12 (The Black-Box Equity Incentive Plan). When someone offers you a percentage of something they won't define, the percentage is a distraction. The value lives in the structure — and if they won't show you the structure, the value is whatever they decide it is, whenever they decide to tell you. Ridgeline promised 10% to Crossfield's management team. No modeling. No documentation. No waterfall position disclosed. Eighteen months post-close, no plan documents had been distributed. Three senior employees had made career decisions based on a percentage without a denominator. The ambiguity wasn't accidental — it preserved the buyer's optionality.