on future activity. This may be a percentage of turnover or a percentage of profits. I’m probably a fan of a percentage of turnover on the basis that this number is significantly easier to calculate and agree on, while profit is extremely subjective. Above the SPV, you may decide to use a holding company. The benefit of a holding company is really if you plan to acquire more than one business, and you wish to separate these businesses. Please see the diagram below:
You will also see a little bubble on the left-hand side of the diagram which says employee shareholders. This is not essential, but it’s sometimes useful to offer some shares to existing share in existing employees as they may be key to this acquisition being successful for you. Caution should be taken here, as your rights need to be protected, and you need the ability to buy back those shares at an agreed price at some stage in the future, but it may be a good way of bringing in loyalty, support, and the right help you need at this stage. 3. Not Doing Proper Due Diligence Anyone considering acquiring a business needs to check all the assumptions that are being made in the deal.
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