Ways to think about comp for an exiting seller team
May 09, 2024
by a searcher from Columbia University in New York, NY, USA
I am working on a deal where the sellers wish to retire, as is common on my deals. They are used to paying themselves basically all the EBITDA, so the step back to market comp has some dissonance for them.
I'm interested in ways this group has either underwritten the transition cost of a multi-seller team, and/or presented the argument to a seller team in a winning way. I like to keep my sellers around, as I appreciate and respect their institutional knowledge. Maybe I've been lucky with particularly generous sellers in the past.
In this case, I would be keeping the sellers for a few months while recruiting a replacement executive, and then carrying them both during some transition period, and then rolling off the seller. I know its not a unique situation, but the requested outgoing comp breaks my model. Interested in thoughts.