A fancy term to address an old problem. When non-owners have some level of control over a business, you have Agency Risk. We always advise our clients to use sale bonus agreements to align senior management incentives with those of the sellers. These are simple, commonplace, and easy to negotiate up front. They can be nearly impossible to negotiate late into the sale process and it can be very costly to not put them in place at all… as we have seen too many times.
Have a great day everyone.
Managing Director, Defense