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  • navya

    •

    5 months

    Sweat Equity Question

    So I have a sales guy wanting to earn equity in my company. I'm having a hard time figuring what would be fair. **So for example-** Revenue $14 million Profit Margin 20% Income $2.8 million we had an offer to be bought a couple months ago at a 6x multiple $16.8 million The guy wants to be able to earn up to 20% equity in the company. My thoughts are 10% earned equity $1.68 million income would need to be brought in. Which is $8,4 million revenue he would need to bring to earn 10% and the same math for 20%. Let me know if this seems correct or they should have to bring more revenue. EDIT-------- Sorry I should've stated the equity would only vest in an acquisition and he would have to be maintaining that revenue level.
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