Notably, the business must have sufficient size to support a management company. Clearly, the economy of scale for a management company is greater than that of a key manager bridge. The management company scenario is usually a compatible tool to business with multiple locations or multiple divisions that work interdependently. Finally, the management company must have a recognized, respected leader. No organization can successfully set direction and achieve goals with multiple heads.
Successful managers are commonly strong willed and expressive.
Owners cannot effectively deal with multiple voices each endeavoring to support his or her opinion. Therefore, the managers as a group must have a leader that can effectively represent the interest of all those involved in the management company. There is significant similarity in the construction of the key manager equity bridges and the management company bridge. 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.