Questions

They'd like to work a few days a month within the business to help deliver what's needed to maximise sale value including strategy / sitting alongside the M&A deal / helping ensure sales soar throughout. They were keen before this and we know them well so not 'new' to us, and have both been through same process with multi $m start-ups. Think they can really help add value, just looking to find the fairest deal all-round e.g. incentive kicker. Thoughts would be super helpful. Thanks!!!

One of the start-ups I'm involved with does a lot of work alongside entrepreneurs building companies towards an eventual exit or sale... Here's a couple of recommendations, aside from the usual "research what typical sales people in your industry get paid" advice:

1. Incentivize unexpected business. In other words, don't pay them too much to solicit or close business that would have been easy for you to get or would have fallen in your lap anyways. Consider having two pay tiers, one slightly lower tier for business you probably could have attained with any salesperson's help and one that contains the dream deals that you'd need a star salesperson to get. Pay them to go after your white whales (Moby Dick reference for anyone who is wondering). This may result in greater overall marketshare than if you just hired a couple salespeople, who will naturally go after the low hanging fruit first.

2. Create a CONTRIBUTION FORMULA for the eventual buyout. If you're looking for a good long-term kicker, give them a piece of the company, based on how much they actually contribute to the bottom line over the period from when they're hired to when the company sells (or they leave). In other words, you may say something like you'll give them up to 5% of the sales price of the company, depending on how much of the revenue they generate. If they generate 50% of the revenue, you'd give them 50% of 5% (or 2.5%) when the company eventually sells.

3. Ask them what would motivate them the most. Duh. How do we not ask our salespeople this more? If there's an answer that excites them more than what we're offering, why wouldn't we consider it, right? We want them as motivated as possible. Of course, before you say "yes" to anything they propose, run it by your mentors, the folks on Clarity.fm and your legal and accounting team.

I'm happy to have a more in-depth conversation on the psychology of motivation and pay (I'll put on my psychology hat) or preparing a company to be sold for the best price possible (my MergerMatch.com hat).

Reach out to me through Clarity.fm if I can help.

Best of luck!

Ken Clark
Coach, consultant and therapist to entrepreneurs


Answered 5 years ago

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