Aligning Management Incentives in the Blue-collar Sector

August 22, 2024
by an investor from University of Oxford in Hamburg, Germany
I'm currently exploring a potential acquisition in the blue-collar sector, specifically within the roofing industry. I'm evaluating a particular roofing company where the current owner is seeking to retire. The company has a somewhat established management layer, and if I were to acquire it, I wouldn't be looking to manage it directly. Instead, I would appoint one of the existing managers to oversee operations and implement strategic initiatives. My role would involve providing strategic direction, such as implementing streamlined processes and establishing key KPIs to ensure accountability.
I'm seeking advice on how to best align interests in this scenario. What strategies would you recommend to incentivize the manager to run operations efficiently, implement new initiatives, and meet the KPIs, all while ensuring our interests are aligned? Should I consider offering equity (through an earn-in), phantom shares, a revenue/profit-sharing arrangement, or something else? What would typical conditions look like?
Although I'm active in the DACH region, I'm looking for general advice, particularly as it applies to the blue-collar industry.
Thanks in advance!
from University of Oxford in Hamburg, Germany
from Maastricht University in Hamburg, Deutschland