Experience with operating partner strategies?

searcher profile

April 29, 2025

by a searcher from Dartmouth College in San Francisco, CA, USA

Currently evaluating a deal that would keep the owner on post-sale as GM. Does anyone have experience with this strategy? Especially as part of a broader roll-up? I'd love to schedule a call with anyone willing to chat (virtual coffee on me)
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Reply by a searcher
from University of Nevada in Henderson, NV, USA
One thing that I would do is allow the owner to keep some equity so he is vested or definitely need a contract in place. I also would make sure the deal has some seller financing in place. The reason being is that if the owner decides to leave at anytime you are going to be in trouble in having to train another operator. So its definitely good that the owner is the GM, but it needs to have guardrails
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
A few quick items to keep in mind. If you plan to use SBA funding if you do a full business acquisition you cannot guarantee the owner more than a one-year employment agreement at time of closing and that agreement has to be as a 1099 employee. Secondarily, with the new SBA rules if the seller retains any equity the purchase has to be done as a stock purchase and the seller needs to guarantee the entire loan for two years. However, you can keep the seller on board in a management role indefinitely if they retain ownership. If you have additional questions related to financing you can reach me here or directly at redacted
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