Anti-embarrassment clause:
Included in Purchase Documents to protect a seller from the "embarrassment" of selling a company to a PE buyer, only for that buyer to turn around shortly after and flip it to someone else for a much higher price.
If this happens, the clause forces the PE buyer to share a portion of those windfall profits with the original seller.
Usually heavily negotiated (buyers hate them), including what's the applicable time window, what defines a trigger event, and how will profits be shared.
Example: If the PE firm flips the company within 6 months, they might have to give the original seller 50% of the upside. If they flip it between 6 and 12 months, that might drop to 25%. After 12 months, no embarrassment.
