An Insight Brief from Executive Benefit Solutions
If you’re approaching a sale or a generational handoff, much of your company’s value depends on people who could leave at any time. Buyers and successors pay for a business that can run without you, and that depends on the leaders you’ve spent years developing.
The questions owners ask at this stage are understandable. How do I keep my leadership team in place through the transition? How do I give them a reason to stay without handing over equity? And how do I avoid a compensation commitment that raises flags in due diligence? This Insight Brief was created to address exactly those questions.
A Performance Units Plan (PUP) is a form of phantom stock. It gives key people a growing reason to stay through the transition, paid in cash and tied to the value you’re working to maximize, with no equity transferred.
Inside, you’ll find a hypothetical example of a family-owned manufacturer that used a PUP to keep its leadership bench intact through a third-generation ownership transfer. You’ll also learn:
- How vesting can work as “golden handcuffs”
- Why tying unit value to rolling three-year adjusted EBITDA keeps your key people focused on a metric that may drive your sale price
- How modeling the liability and funding up front makes the plan a known commitment rather than a question mark in diligence
Whether a sale is a few years out or succession planning is already underway, this Brief gives you a foundation for protecting the team, and the value, you’ve built.
Download the Insight Brief to see how a Performance Units Plan may help keep your best people through the transition that matters most.
Also building your leadership team? See our companion Insight Brief, Using a Performance Units Plan as a Retention and Recruiting Tool.