PRE-AGREE TO BUYOUT TERMS; BECOME EMPLOYEE FOR 3-5 YEARS - THOUGHTS/EXP.
Seeking to speak with folks who have become employees of target company prior to purchase. Specifically want to hear about the deal structures.
I am contemplating something similar to the following:
1) pre-agree price/terms
2) become president for[redacted]month transition with salary
3) become CEO after[redacted]months
4) complete purchase in 4-5 years
Purchase price = $10M to be paid using biz cash flow for 4-5 years and then lump sum at end of term.
i.e. Seller takes $1M/year out of business for 5 years would result in a Year 5 payment of $5M.
After transition period, Seller would be able to retire yet still have 100% equity of biz until the $5M buyout at the end.
Appreciate any thoughts and guidance.