Stock options for seller?

by a searcher

2 months ago

Hi - has anyone every seen or utilized stock options, as opposed to stock, for seller ongoing involvement?

My thought is that the primary goal is to give them the second bite on an upside scenario, but that I don't see cash flows being sufficient to pay them proceeds during the interim.    

I haven't seen any mention, including MM/PE.     I imagine there is a lot of complexity, and that the seller might be concerned around liquidity if I hold for longer term.

The business is a solid but risky $1M EBITDA that is in my area of expertise.   I am pretty confident that with investments and some strategic adjustment, it can be a $2M+ business attractive to strategics, though I am not committed either way on hold vs sell.   The seller will likely be staying in the business

4 likes
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2 comments

searcher from Warsaw School of Economics

Sounds like a really interesting approach. The main issue, I suppose, could be apprehension from the seller.

2 months ago | like reply | 0 likes

professional from University at Albany, State University of New York - School of Business

Yes, we do that on occasion. Sometimes to sweeten a deal and sometimes with vesting to ensure the recipient does something we want them to do.

2 months ago | like reply | 0 likes

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