Video 3 – How to Incentivise Your Team When Selling a Business

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Rob Goddard:

So, incentivisation of management team, senior team, how do you get them on board and for them to benefit on the upside of a business sale, Steve?

Steve Barry:

Yeah, it’s a good one because we regularly have clients that chat to us about the fact that they’ve either put some form of a management incentive plan, or incentive share option in place as a precursor to go into market. And that sounds like a really good idea unless you’re the investor, or buyer, and you then work out that the senior leadership team have got a five, six figure sum coming out of share options, or an incentive plan at the point of transaction. So, I’m not sure that’s necessarily a good answer.

Steve Barry:

But I think outside of that you’re going to need to rely on them during the process, so they’re going to need to help you on what they’re doing anyway, so they need to have some level of involvement. They need to see some future in the story with the partner that you’re introducing, we’re introducing them to, to make it work. And then, they need to see that the investor, the acquirer needs them as well as the business.

Mike Whittle:

Yeah, I’d agree with all that. I’d say that during the process, during the sales process there comes a time when the owner needs to introduce the senior team they’ve put in place that represent the business going forward. And those people need to be involved in the process and have a stake in that process. Typically, the acquirer wants to incent those people going forward anyway, and put in place some sort of sweet equity pot. So, bringing them to the table at the right time in the transaction, demonstrating their commitment to stay involved, those are the key things.

Rob Goddard:

Yeah, and I would add the best people arguably, on paper, to buy a business are the existing management team but, of course, usually they don’t have the money, and the resources. But they do have the technical knowhow, and the knowledge, and experience. So, bringing them in is really important to a deal. And it could be really good news for non-shareholders in the senior team because this could be the next chapter in their career. Maybe they’re going to be offered some sort of equity shares in the business going forward under [inaudible 00:00:02:13]. So, lots of possibilities, but to be sold in the right way.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

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