Before You Exit: How Management Equity Incentive Plans Support Stronger Transaction Values

Executive Management Equity Incentive Plans are a powerful tool to incentivize key employees and create value in anticipation of an M&A transaction.

When business owners contemplate a future sale of their business, they commonly consider traditional valuation factors, including EBITDA, revenue, and market position. While these metrics are critical, they do not tell the whole story. Buyers will value intangible drivers, including the strength and stability of the company’s management team.  A prospective buyer will want to know whether key executives are likely to remain with the company after closing with motivation to continue growing the business during the transition period and beyond. This is the first installment in a series of three articles that focus on management incentives in the context of a transaction.