Start-up recruiting key talent from larger competitors

Business sector: Technology

Turnover: £200k

Shareholder/business goals and challenges

  • Needed to recruit key talent to drive business forwards but with limited cash resources
  • Target employees employed by larger businesses within the same sector who offer greater salary and bonuses
  • Start-up needed to offer share incentives to secure target employees with the prospect of very meaningful upside if the business succeeds

What we did and achieved

  • Set up a tax efficient Enterprise Management Incentive option plan which was used as a key part of the company’s recruitment negotiations
  • All new recruits joined the start-up company from larger more established competitors
  • New employees building up meaningful stakes in the business on meeting certain milestones but without impacting on control of founder shareholders
  • Buy-in cost negligible for new recruits, enabling them to acquire their shares over time and with ultimate returns taxed at only 10%

About the author

John Dormer Partner

John specialises in employee incentive work and regularly provides advice on the structuring, implementation, maintenance and vesting of management and employee incentive arrangements to both UK and overseas companies of varying sizes.