I know this topic comes up quite regularly - so please forgive me - but didn't quite find what I was looking for when I searched here.

- Self funded searcher looking to acquire a ~30 person B2B-focused electrical installation business, ~1m EBITDA
- Co-owners (50/50) actively involved in the business are looking to retire / transition out, currently roles:
> CEO: customer acquisition / relationship mgmt, finance, project costing, HR, general admin, corporate topics (i.e. generally "non-technical" topics)
> COO: customer acquisition / relationship mgmt, project costing, steering project managers / ensuring appropriate staffing on projects, problem-solving on projects
- Idea is for me to step into the CEO's shoes - which in their (and so far also my) view is feasible despite my lack of sector background (I'm a finance guy)
- They have a current deputy COO which they have been grooming to step up - which we all agree will be critical to ensure he is on board and motivated for the transition / long-haul (given the technical side, and experience which I lack)
- We have discussed incentivizing / locking him in e.g. through a 5-10% equity stake although this is likely tricky to achieve on day 1 due to 1) uncertainty if he will really be the right fit with me (from both sides, I haven't met him yet but would get the opportunity later in the process) and 2) lack of capital from his side to invest
- There might be 1-2 other key staff which it could also make sense to tie in / incentivize in this way
- The sellers have put forward the idea of retaining this 5-10% equity stake (in practice re-invest into my acquisition vehicle) for an interim periood (feels like they're thinking months rather than years, basically only as long as they would remain operationally involved in the business) - to then allocate accordingly in due course

Thoughts / questions:
- Helpful that the sellers are open to find solutions but I'm not covinced this is the right one:
> In an ideal world I would get more committment/certainty from the future COO up-front (but I'm not sure how realistic this is in the fog of the deal)
> Structuring it this way (in terms of timing) probably complicates things from a financing perspective for his stake - i.e. he would need to benefit from the broader financing package in the same way I would, for him to have any chance of getting the cash together (I'm putting in 15-20% equity, with the balance bank (trad, not SBA, deal is in Europe) and vendor loan)
> "What's in it for him?" (beyond an attractive investment in the long-term), to actually put capital in, particularly in such a minority context
- Seems more realistic to incentivize him with some kind LT stock grant programme (ideas for typical way to structure this welcome!)
> This is then more of a structure to incentivize upside though rather than mitigate downside (worst case him leaving) which I'd have more of if he actually put something more that sweat equity in
- On the other hand I wonder if it might be wiser to keep things simpler by not bringing employees into the equity, to avoid 1) future governance complications and 2) sharing financials in full transparency - and instead work with cash bonusses tied to certain KPIs e.g. (but again this structure lacks the downside mitigation)

Any thoughts super-appreciated - even if just referring to other posts / resources I might have missed!