Growth Shares for retained management

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May 06, 2026

by a searcher in United Kingdom

I am in the process of agreeing terms to buy a small surveying consultancy. The two founders will remain in position and manage the business on market rate salaries. The adjusted EBITDA is circa £600k and I would pay 4x with 60% on completion and the balance over 2 years contingent on performance being maintained. My strategy is simple - professionalise (adopt EOS or similar), digitise and motivate. To motivate I am intending to grant the founders growth shares so they can benefit in the future growth they help to deliver. Does anyone have any experience in granting growth shares in similar scenarios? Is 20-30% of the growth in value appropriate? Should I build in a put and call option after 5 years as this is part of an evergreen investment? Should I fix the multiple – I am paying 4x now so could stick with this for the valuation mechanism of the growth shares the multiple expansion with me? Do people have a built-in increase of the hurdle – say 5% a year? The biggest unknown I have is how to treat fold-ins? I will buy complimentary businesses but don’t want to reward the management for future investments made by me. Fixing the multiple may help with this. Thank you in advance for any comments.
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Reply by a searcher
from KEDGE Business School in London, UK
I’m not sure about the percentages you should offer. I guess it depends what will motivate them. Only you and them will know that. Maybe run a few scenarios and see what it would mean for them in concrete bonuses. For the structure, I believe it’s fairly straight forward: give them shares in the opco, but acquire new businesses with a holdco where you’re the only shareholder. The holdco owns the remaining shares in the opco (the ones they don’t own). This is the legal structure. How the businesses work together is completely up to you - very integrated, or less integrated… Obviously check this with a lawyer (like @redacted‌).
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Reply by a searcher
in London, UK
Just a question... what makes you think that offering them growth shares will incentivise them, more so than they are incentivised now? Just wondering. As arguably now it's their business, that should be the highest motivation. Also the 40% seller note is already contingent on performance as well.
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