Experience with owners that want to stay on?

by a searcher from University of Pennsylvania - The Wharton School

4 months ago

I'm looking at a deal where one owners wants to sell ASAP, while the other wants to continue working for a few years. The owner who wants to stay is open to different deal structures and I'm curious what others have found success with.

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26 comments

searcher from Pennsylvania State University

I would not recommend buying partners. Structure as 100% equity or stock deal. if the partner provides value and the personality is a fit, I would go with keeping them on as a consultant on a contractor basis. You will want the ability to terminate at any time and declaw authority over employees while keeping tribal knowledge. The transition from owner to employee has a psychological impact that most sellers are not prepared for. You will need to ensure that you are in complete control post-close. Protect your asset first, then your employees, and sellers last.

2 months ago | like reply | 0 likes

professional from University of Wisconsin - Platteville

Have you asked the partner sticking around what he/she wants? That's where I'd start. See what they are thinking and what they would be open to. Also what percent of the business would the staying partner own? Assuming a minority ownership. There's many ways this could be structured, but the best way is one that the staying owner would benefit from. Keeping as much equity in the business as long as you are controlling would be the best. When that person wants to leave, you can to a re-valuation and they can take advantage of the growth.\

4 months ago | like reply | 0 likes

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