Best COO Key Man Clauses

by a searcher from Columbia University - Columbia Business School

1 year ago

What structures would a buyer use for a key man who is NOT an owner?  Some sort of earn out or vesting for a slice of equity?

I would like to keep this person as a COO as  business is something I am not overly familiar with.

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3 comments

professional from Marquette University

There are a lot of things you can do including retention bonuses (the seller and/or you pay for). Warning: be careful when "giving" equity and also its timing. People don't value a gift as much as when they earn it. Just got done with a succession plan where an employee is buying equity via their bonuses. And don't provide equity too soon. Make sure the COO and you are compatible long term.

1 year ago | like reply | 2 likes

professional from Harvard University - Harvard Business School

I agree with ^Searchfunder member‌. Make the package so attractive that they’re motivated to stay. Vesting equity and vesting bonuses have worked.

1 year ago | like reply | 2 likes

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