Molson Hart

One aspect that a lot of owners seem to overlook is that a CEO or top exec role w/ equity is a scarce and desirable role -- tapping into the right talent pools draws out dissatisfied stars in droves. Great people crave agency and autonomy and you can provide that, plus upside!

What's the minimum co size to have the equity incentive work you reckon?

It could work at any level. Probably easier to attract the best talent at larger firms or fast growing ones in larger markets, situations where the potential future equity value can become most meaningful.

Our struggle at smaller firms hasn’t been in finding great talent but in keeping them aligned to the growth of the business. As a firm we have a longer time horizon for the growth of these businesses and tolerance for more variability than what most individuals can withstand.

That’s insightful and I can understand how that would be an issue for a lot of people. You also have a portfolio and they don’t. Because (I’m guessing) your companies are also in smaller markets, has geography ever been a recruiting challenge?

Yes. But we did realize that part so we only recruit in the geography. No one is moving for a “ceo” job at one of our current sized businesses. About 45 minute drive time from their current home seems to be limit. Often their geography is a lot lot tighter than that.

That doesn’t make sense to me. These companies must be really small. When I was looking at selling my business to sba buyers, they were all down to move.

I think someone looking to do an SBA loan for a business likely could be. Self-fulfilling prophecy. I’m more thinking in this thread about hiring employees and how to incentive them to think like an owner. Best way is to make them one. But better have incentives aligned.