As we prepare the business for a clean exit, some of my leadership team members are demanding equity or massive retention bonuses, hinting that they might leave before the transaction is finalized if they do not get them. How do we align them to the exit strategy?

Question

Tyler Smith · Accepted Answer

When leadership team members begin demanding equity or massive retention bonuses as you prepare for an exit, they are practicing status management and leverage plays. If you cave to these threats, you establish a culture of extortion that will sabotage your transaction.

You must address this issue by realigning them to the V/TO and reinforcing the LMA framework. Your leaders must understand that their value to a buyer is tied directly to the stability and performance of the company, not their ability to hold the owner hostage.

First, evaluate each demanding leader using the GWC tool. Do they truly Get, Want, and have the Capacity to lead the company through a transition? A leader who uses threats to secure bonuses is likely showing low trust and high self orientation, which are major red flags under the Trust Equation.

Second, design a formal, structured executive retention plan with your investment bankers or legal counsel. This plan should align their payouts with successful transaction milestones and post close performance, rather than flat demands. Present this plan as a unified company strategy, not a series of individual negotiations.

Be completely open and honest. Explain that while you value their contribution and want them to share in the success of a clean exit, you will not negotiate under pressure. If a leader refuses to align with the plan and continues to threaten to leave, call their bluff. Use your Accountability Chart to identify succession candidates and begin transitioning their responsibilities immediately.