Is there a way to keep existing owners on with a 7a loan?

June 27, 2022
by a searcher from Brigham Young University in Mesa, AZ, USA
I have a deal where the owners will be retiring in the next 5 years, but they would like to stay on and manage the company. They are just looking to take out some equity (I would buy 80% of the company) to pay off their 7a, which includes real estate (which I would not be buying).
Is there a creative way to get around the SBA rules that:
1. You have to buy 1o0 percent of the company
2. The owners have to leave after 1 year max
A couple of thoughts:
I could implement a phantom stock program or profit sharing to allow them to participate in the potential equity gains.
There are actually two companies here that operate as one. So I could buy one, then merge the other together with it? As in, value the one company at 80% of the total, I buy 100% of that, then merge the two together so they now have 20% of the whole, and become owners in the new org?
from Stanford University in Honolulu, HI, USA
Besides Bruce's cautions, I would add that sometimes the rules are there for your benefit as well. I would say that for every 50 new operators I've talked to, perhaps 1 has kept the owner onboard for any length of time after the sale and been happy with it. Generally, the seller has been retained in a specific role -- for instance -- if they really hated the day-to-day operations but loved biz dev. For a few out of the 50, the seller was pretty much checked out as soon as the deal closed -- which is probably too short. Of the remainder, the operators were pretty happy for the seller to be out of the picture by the time the seller left.
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
However, for the company you are buying, you could not guarantee them more than a 1-year of employment as part of the contract and 100% of the stock or ownership would need to transfer to you, your entity, and your partners.