Best practices for agreeing for a minority share for the seller?
Any experiences of successful arrangements with the seller keeping minority stake from the target company? What to be considered?
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by a searcher
from Henley Business School
in Helsinki, Finland
in Helsinki, Finland
5yrs ago
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by a professional
2yrs ago
from University of California, Berkeley in Tampa, FL, USA
from University of California, Berkeley in Tampa, FL, USA
Make sure they/you have a clear understanding of what activities/projects/duties/responsibilities/authority they will have and how much time they are required to be involved in company related business
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by a searcher
2mos ago
from Georgia State University in Atlanta, GA, USA
from Georgia State University in Atlanta, GA, USA
Good points above on governance and buyouts. A couple of things I would add is even if you lock down voting rights, a former owner with a minority stake can still have outsized soft power (employees, vendors, even customers may keep going to them). So it’s not just legal structure, it’s operational separation. So be explicit on decision making, communicate that clearly to team/customers, and make sure seller is aligned with reinforcing that and not undermining it. Also, while the put/call options are great....funding the buyout matters just as much. Seen deals where the mechanism exists but no one can actually write the check when it triggers.
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