However, as reflected upon above, the Management Company Succession Bridge has a few more moving parts that have to be tied together with documentation. With respect to similarities, employment contracts and a stockholders agreement are needed to record fundamental agreements regarding compensation of owners and managers and the disposition of stock. If the owners anticipate continuing to take compensation for services rendered or just as a reflection of ownership, the amount and terms of this compensation is discussed, agreed upon and documented in an employment contract. The specific duties and pay plans for each of the managers should also be nailed down to prevent misunderstandings. Assumptions and promises about compensation and responsibilities will only breed problems later, when the program comes under stress due to a down turn in business or the emergence of greed.
Documentation precludes selective memory.
The Stockholders Agreement also records stock related agreements and stipulates the structure of future stock transactions. The terms for the purchase of this stock, the terms for holding the stock and the restrictions on the transfer of the stock are spelled out in detail in this very important agreement. No effort should be spared in addressing the various stock related circumstances that could impact the welfare of stockholders or the business. Another common feature of the management company bridge is the strategic operating plan. As discussed earlier, the strategic operating plan futures the organization.