Best COO Key Man Clauses

searcher profile

December 29, 2022

by a searcher from Columbia University - Columbia Business School in Jacksonville, FL, USA

What structures would a buyer use for a key man who is NOT an owner? Some sort of earn out or vesting for a slice of equity?

I would like to keep this person as a COO as business is something I am not overly familiar with.

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commentor profile
Reply by a professional
from Marquette University in Kirkland, WA, USA
There are a lot of things you can do including retention bonuses (the seller and/or you pay for). Warning: be careful when "giving" equity and also its timing. People don't value a gift as much as when they earn it. Just got done with a succession plan where an employee is buying equity via their bonuses. And don't provide equity too soon. Make sure the COO and you are compatible long term.
commentor profile
Reply by a professional
from Harvard University in Atlanta, GA, USA
I agree with ^redacted‌. Make the package so attractive that they’re motivated to stay. Vesting equity and vesting bonuses have worked.
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