BECOMING AN EMPLOYEE INSTEAD OF AN OWNER....FOR 1 YEAR.
I'm pursuing an opportunity with a $12 million+ purchase price. The seller has agreed to stay on for one year post close, however, then he wants out of day-to-day responsibilities. I'm okay with this arrangement.
The opportunity was just presented for me to join the business as a key employee and work with the owner as President for one year. I would then buy the company at that time and allow the owner to fully exit.
The terms are such that the purchase price would be predefined and articulated in my employment agreement. I would have the full option to buy the business at this price in one year.
The benefits to accepting this employment-before-ownership path seem clear: (1) it gives me a year to learn the business before accepting full ownership responsibility; (2) company employees will be less startled as an "outsider" isn't the new owner over night; (3) banks prefer to lend to buyers who are current employees/ have relevant industry experience, so those lending discussions would likely be smooth; (4) we could structure my salary to be 100% equity based, so i'd be earning equity along the way; (5) all of these factors would enable me to raise less outside equity capital.
What is the downside of pursuing this employment-before-ownership approach? Is there something big that i'm missing?