The buyer wants to make ten percent of our purchase price contingent on our leadership team remaining with the company for two years post-close. How do we structure the purchase agreement so their departure under the buyer's management does not cost us our payout?

Question

Tyler Smith · Accepted Answer

Tying your transaction proceeds to the post-close employment of your team is a massive risk. If the buyer creates a toxic work environment or changes the operational culture, your leaders may walk away, costing you millions of dollars through no fault of your own. You must isolate your exit proceeds from employee behavior. First, push to remove this retention contingency entirely from the purchase price. Argue that your team's alignment is already proven by your clean Accountability Chart and operational systems. Suggest that the buyer establish their own retention bonus pool to incentivize the team directly, rather than using your money. If the buyer refuses to budge, negotiate narrow good leaver provisions. The agreement must state that your purchase price remains fully protected if an employee leaves due to death, disability, termination without cause, or constructive termination. Constructive termination must include any reduction in their compensation, loss of title, or material change in their job description. By defining these protections, you ensure that if the buyer mismanages your team or forces them out, you do not suffer the financial consequences. Keep the operational execution risk on the buyer where it belongs.