In Exit Strategies

Stay Bonuses Add Value

By Brad Kirkpatrick

Brad KirkpatrickConfidentiality is important in a sale. But what do you do when critical employees must be informed? We recommend stay bonuses. A stay bonus provides an incentive for key employees to cooperate and assist with a sale.

We see stay bonuses typically ranging from 20% to 100% of an employee’s annual compensation. It’s common to allocate around 50% percent at closing and 50% six months or a year later. Buyers want assurances the management team will stick around. A stay bonus significantly increases that chance. It’s a nice carrot for the employee and also a nice way to say thank you. It will make your company more saleable because it lowers a buyer’s risk.

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