Employee Incentive Plans and Planning a Successful Owner Exit

A key area in maximizing company value and minimizing owner transition risk is incentive planning for key and important employees.  

Once an owner has an accurate GAP Analysis and knows how much they need to grow the value of the business within their planned time frame for exit, they could be wise to MOTIVATE the appropriate employees with incentive plans aligned with strategic goals for growth (i.e, profitability).  

Key employees not incentivized to remain through the owner's exit can seriously impact the owner proceeds at sale, and even destroy a deal.  RETENTION through the owner's transition is a significant factor in planning incentive programs for key employees.

Incentive Plans are also utilized to REWARD superior performance and to begin to TRANSFER ownership in anticipation of the owner leaving the business.

Stock Option Plan?  Stock Bonus Plan? Cash-based plan?  Both?  What will best achieve your goals?  Incentive planning is important for successful growth and exit but it is also quite complicated requiring deep expertise in statutory and technical requirements, tax planning and other areas.   

A qualified Exit Planner will help you in deciding what would make sense in your business situation, and work with the appropriate professional experts (i.e., business attorney, CPA) in implementing an impactful incentive plan to accomplish your goals.

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Patrick Ennis

Ennis Consulting & Conciliation, Montgomery Village, MD

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