How have people thought about key man risk?
April 25, 2024
by a searcher in New York, NY, USA
We are looking at a healthcare company where there is a clear rainmaker. For those who have similar deals, how have you structured the employment agreement post close?
from University of Waterloo in Toronto, ON, Canada
1. Deferred deal bonus based on performance over a [3] (or longer) period
2. Giving them some equity/options that vest on change of control
I would be most concerned if the rainmaker is also the owner of the clinic because they'll be getting a large lump sum, and may take their foot off the gas. If that's the case, I would assume a normalized production level in terms of Adj. EBITDA, and offer some kind of earnout if the owner continues to be a rainmaker during your hold period.
from University of Kansas in Dallas, TX, USA