We want to put key-employee retention incentives in place during our two-year exit runway, but we do not want to trigger suspicion or make promises we cannot deliver. How do we structure these agreements?

Question

Tyler Smith · Accepted Answer

Retaining your core leadership team is vital because buyers are purchasing the team's ability to execute without you. To secure their commitment without prematurely revealing your exit plans, tie your retention incentives to long-term operational performance. Design a structured incentive program, such as phantom equity or a performance-based stay bonus, that rewards key leaders for hitting specific milestones over the next twenty-four to thirty-six months. Align these milestones directly with the company's 3-Year Picture on your V/TO. Frame the incentives around company growth and operational stability, which are highly attractive regardless of whether you sell or stay. This approach maintains high trust and reliability while keeping your self-orientation low. Ensure the agreements are tied to their specific seats on the Accountability Chart and their ability to hit their weekly Scorecard numbers and quarterly Rocks. By structuring the incentives this way, you motivate your team to build a highly valuable, self-sustaining business. If a sale does occur, the buyer will be thrilled to inherit an aligned, incentivized leadership team, and you will have secured the operational continuity required to protect your valuation.