Don’t Die From Buyer Fever
Oct 23rd, 2009 | By admin | Category: Post-Acquisition Planning & Management“Death” from business buyer fever occurs when a buyer wants a particular business so badly that common sense goes out the window. Even people who know what to do sometimes do the wrong thing, especially if they have a bad case of buyer fever.
Hello there,
I am working with a partner to purchase a pool hall / bar from a private seller. Profitable business for 20 years, simple operation, 3 employees, etc. My partner & I will provide the purchase cost, but our day-jobs will prevent us from managing the daily operations. We have a manager in mind who is competent to run the operations. My question is regarding sharing equity in the business — Any thoughts on providing the manager with an equity stake in the business? Key points:
– The thought is providing an equity stake will ensure honesty and a determination to increase profits.
– Manager may receive $$ in bonus based on profitability until the 2 partners have recouped their investment, then allow manager to earn a share. OR, provide Manager a 5% stake right from the start, with the option to buy into a greater stake in the future.
– What about an equity stake for the Manager, but he must return the stake once he leaves employment?
Just curious what others have experienced or think.
Thank you,
Devon