2-STAGE ACQUISITION WITH 12 MONTH TRANSITION PERIOD

Does anyone have experience with a 2-stage buyout? I'm looking at a transaction where step 1 would be 50% equity ownership with the seller continuing on with the business for 12 months and step 2 would be a full buyout. I'd like to discuss how one would structure such as deal in terms of the equity valuation and payment of consideration at step 1 and step 2.

In particular for step 2, seller would like predefined base valuation with potential for upside capture. There is room to include an earnout as well as seller note or rollover equity for stage 2. Also initial transaction will not include debt financing but I'd like to leverage the company's cash flows to finance the stage 2 payout.

I realize a lot of issues may arise during the 1 year transition given incentive for the buyer and seller won't be completely aligned but in this case due to some idiosyncratic reasons a longer transition makes sense for both parties.

If you experience with such a situation in the past, please let me know how I can connect with you to discuss further. Thanks



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