M&A Advisor Tip: Stay Bonuses Add Value
Confidentiality is important in a sale. But what do you do when critical employees must be informed? We recommend stay bonuses. A stay bonus provides an incentive for key employees to cooperate and assist with a sale.
We see stay bonuses ranging from 20% to 100% or more of an employee’s salary. It’s common to allocate around 50% percent at closing and 50% six months or a year later. Buyers want assurances the management team will stick around. A stay bonus significantly increases that chance. It’s a nice carrot for the employee, and it makes your company more saleable because it lowers a buyer’s risk.
For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at email@example.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.