LOI- Key Man Provision

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May 26, 2026

by a searcher from University of Texas at Brownsville in Houston, TX, USA

I am looking at a deal where the general manager ( not the owner) is the key man. The general manager has a license, while not hard to obtain, I want to ensure continuity for at least 6-12 months. What are some provisions that you have used in the LOI or other forms of employment retention?
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Reply by a professional-advisory
from Sofia University "St. Kliment Ohridski" in Sofia, Bulgaria
I think you need to get an understanding of whether the GM actually wants to stay post-close. If they don't - the path is obvious, but otherwise you might be able to create some time for yourself during which you can start aggressively map customer/vendor relationships; undocumented processes; what breaks if they disappear in a week's notice; etc; The retention agreement buys time. Reducing key-person dependency is what actually lowers the risk long term.
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Reply by a professional
from West Virginia State College in Austin, TX, USA
In situations like this, I like short-term retention mechanisms (like an employment agreement and stay incentives) with key person coverage and other layers that help manage downside risk if something unexpected happens and helps preserve continuity. Most of the conversation focuses on keeping the operator in place, but having a plan for what happens if that doesn’t hold is just as important.
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