Get Centered About Your Approach to Compensation Before Taking on Acquisitions or Roll Ups

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What if your exit strategy is to sell your $100 Mil/yr firm in 5 years? Who are the key team members who would have helped you drive the profitable growth to reach $100 Mil/yr? What will each key player be accountable to produce during that five year journey? Have some scenarios been generated to project an optimum mix of base salaries, performance bonuses, and profit sharing? How much risk are you willing to take that one or more of those team members leave during those five years? Should some equity be involved to feed the voracious cash hunger that most rapidly growing companies have?

These sound like reasonable questions, right? The funny thing is, answering these questions can get out on the back burner as sales proposals are written, the IT infrastructure goes to the cloud, and measurement of customer net promoter scores get computed.

But imagine if your plan to grow to $100 Mil isn’t just organic.  What if it involves some acquisitions or a roll up?

It you think conflicting business valuations can interfere with the success of acquisitions (which they do), try having fuzzy compensation formulas for senior people!  Nothing will interfere with the successful integration of firms more than that.

When my growth consulting firm facilitated a 16 company roll up, the leaders of the primary client were reluctant to take the time to solidify their own approach to compensation before entering into negotiations with prospective roll up candidates.  We have become much more insistent about this step since then because the first three deals (that should/could have worked) fell apart when key players felt disenfranchised, unappreciated, and inadequately protected.  Once they paused, brought in “the comp. guy”, and took care of their own people, they could proceed with the roll up.  By the third roll up participant, there was a comfortable philosophy behind compensation that would apply to all rolled up companies from that point forward.

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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