Avoid “Founders First” Compensation Structures
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Acquirers want to see fair treatment of your team, not just a windfall for founders. A team that has been treated fairly is more likely to stick around post-acquisition, adding to the value of the company long-term.
BEST PRACTICES:
Avoid token wages or zero-salary arrangements for employees. Even if equity is generous, failure to pay fair wages can be a red flag for buyers and regulators and can result in claims alleging significant damages. Benchmark your team’s salaries and benefits against startups of similar size, industry, and geography. This demonstrates maturity and professionalism to acquirers.
Don’t delay paying competitive wages with the hope of future raises post-acquisition.
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