How are board members paid on self funded deals?

searcher profile

November 13, 2024

by a searcher from Northwestern University - Kellogg School of Management in Houston, TX, USA

I'm curious how other self funded searchers compensated board managers on SBA deals?

Annual cash payment?

1-3% in equity?

Cash plus equity?

Is this documented by your attorney in the operating agreement at closing?

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commentor profile
Reply by a searcher
from Washington University in St. Louis in New York, NY, USA
I had a board of advisors during the search phase, which helped gain credibility with sellers. They received ROFR on investing in the deal.

Disbanded the formal advisory board after closing, but my investors still provide good advice ad-hoc
commentor profile
Reply by a professional
from University of Michigan in Detroit, MI, USA
Hi ^redacted‌, I've never seen compensation for board members on self-funded deals. Doesn't mean it doesn't happen--but I imagine it is rare. You know your economics better than anyone else. Can you afford cash compensation? If not, equity is your only choice. Your lawyer can help you draft an operating agreement and the other legal docs.
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