We are on a two-year runway to a sale and need to ensure our leadership team does not leave when they find out a transaction is coming. How do we design retention incentives that align with our EOS® Rocks and ensure the team stays focused through the close?

Question

Tyler Smith · Accepted Answer

A talented leadership team is a vital operational asset that buyers pay a premium for. If your key leaders leave during the sales process, your transaction could easily fall apart. You need to keep them motivated and aligned. To do this, design a structured retention program that links financial incentives to your business goals. Avoid broad, unstructured promises. Instead, create a stay bonus or phantom equity program that is directly tied to hitting quarterly Rocks and annual V/TO targets. By tying incentives to their Rocks, you keep your leadership team focused on what they do best: executing the business plan. This structure keeps their eyes on daily operations rather than the distractions of an impending sale. Ensure that your incentives have a clear vesting schedule. For example, a portion of the bonus should be paid at the close of the transaction, with the remainder paid out twelve months after the sale, contingent on them remaining in their seats. This approach reassures the buyer that the leadership team is committed to the transition. By aligning their incentives with the company's financial and operational targets, you ensure the business remains healthy and easy to run right up to the day of the sale.