Business Merger
Discussion
I run my own cleaning company and am looking to join forces with an existing cleaning company that offers slightly different services, and looking to keep on the existing directors.
I need to work out how to keep them interested and motivated to continue to grow and thrive the business.
My business is established and quite well known, their business is only 3 years old but has some nice contracts that we would take over under my company.
Options/suggestions:
1) Employ the directors and give a profit share of new business in their field and any existing contracts they br.
2) They keep their ltd company and new business in their field is invoiced through my company and pay them a percentage.
3) They become Directors of my company and paid a percentage of the new work.
Really struck brain dead on this, so any ideas on how to keep them keen would be great.
I need to work out how to keep them interested and motivated to continue to grow and thrive the business.
My business is established and quite well known, their business is only 3 years old but has some nice contracts that we would take over under my company.
Options/suggestions:
1) Employ the directors and give a profit share of new business in their field and any existing contracts they br.
2) They keep their ltd company and new business in their field is invoiced through my company and pay them a percentage.
3) They become Directors of my company and paid a percentage of the new work.
Really struck brain dead on this, so any ideas on how to keep them keen would be great.
How would this be structured, my business is about 10x the turnover of there’s, and profit, well, considerably more.
Can these shares be taken away should the arrangement not work out in the future?
I have a newly limited company, hence the questions as I have been badly advised by previous accountants that I don’t need to be limited. Been trading 10 years.
Can these shares be taken away should the arrangement not work out in the future?
I have a newly limited company, hence the questions as I have been badly advised by previous accountants that I don’t need to be limited. Been trading 10 years.
Been through this a couple of times both as merger and 'mergee'.
On the assumption the amalgamation is a mutually agreeable one then there's no reason to think that the directors will be demotivated in any way unless their company is on the ropes which it doesn't sound like from your post.
The biggest threat to motivation will come from them no longer being controllers of their own destiny, transitioning from self-employment to employment. Equity and a seat at the table are the most effective means to keep them engaged as they then retain a modicum of control.
Beyond on that, it comes down to personal relationships. Organise a dinner with them and their other halves; arrange Director's days out - golf (if that's your bag), get to know them at a person level.
On the assumption the amalgamation is a mutually agreeable one then there's no reason to think that the directors will be demotivated in any way unless their company is on the ropes which it doesn't sound like from your post.
The biggest threat to motivation will come from them no longer being controllers of their own destiny, transitioning from self-employment to employment. Equity and a seat at the table are the most effective means to keep them engaged as they then retain a modicum of control.
Beyond on that, it comes down to personal relationships. Organise a dinner with them and their other halves; arrange Director's days out - golf (if that's your bag), get to know them at a person level.
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