Growth Shares for retained management
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.