Hi All!

I am ~3 weeks out from closing on a business where there is one key employee that has been with the business for ~20+ years. As both a token of appreciation for this employee's commitment to the business as well as a tool to incentivize retention post close, the seller wants to put some type of financial incentive in place. I feel incredibly fortunate to have a seller that wants to proactively put this in place and is willing to reduce their own financial profits to set the business/myself up for success but we are struggling to land on an approach. Any ideas of how to solution for this scenario?

A few considerations:
-Conceptually the idea is to structure something such that the employee receives payments over time based on how long he stays on post close
-I am using an SBA loan as well as a 15% seller note and we are in the closing process with the bank - whatever we land on priority is to not delay the deal/impact the SBA closing process
-The seller wants to limit tax liability where possible
-A few ideas that have been thrown out by the seller, each of which have drawbacks: putting a portion of proceeds from the transaction in escrow and signing an agreement with the employee with payout terms, reducing the purchase price and working something out such as an incentive plan for employee that I would payout over time (there is already profit sharing in place so this would be in addition to that)

Thanks in advance for any ideas!