32:42: Can you ask about the ages of every employee to understand the risk of long-standing employees who may be approaching retirement? And yeah, and just to have that be part of your calculus, maybe this person will, this employee will use the acquisition as an opportunity to go ahead and retire, or is this somehow violating discrimination stuff or something like that? We don’t usually ask for it, and you’re right to consider it an issue. It will, or a possible issue, but it will come up in conversation. Sometimes we do ask for the tenure of the employees as part of the normal course. So if you see a tenure of a certain number of years, you can make certain assumptions about that. We have one right now that’s live, where several of the people—I think the majority of the employees—have been there 20-plus years, right? So this is definitely a live issue for them, for those buyers, for that buyer. But asking age is not something that we’ve done.

34:34: I-9s and the legality of workers. James David, you glanced off the obvious that this is in the news constantly, and an issue affecting many people, many owners, many would-be owners, many employees. Uh, anything to say about what you’re seeing, anything from the front lines of this market, of what you guys are seeing? Is this affecting acquisition? I shouldn’t say anyway.

36:48: Could you go back to the slide around equity grants and so on, and profit interest? Great. There were a bunch of questions off this slide. First of all, when you say profit interests versus profit sharing. Same, same.

38:55: Uh, phantom equity—did you guys touch on it today?

40:00: Why don’t you like it, James David? How would somebody screw employees? Because with all these little qualifications, they—

41:20: And this point, that it’s a contract—the implication of that means it’s only as good as how well that contract is written. And there kind of are no rules. It’s kind of like whatever. Yeah, that’s the implication.

42:20: And question on these tax implications directly. So you gave the example of if you were to give—if you, when you give equity to an employee, when you grant equity to an employee, it’s a taxable event. It’s because you’re effectively giving them monetary value. And it’s a transaction of sorts, and the government taxes that. Is granting phantom equity? No, no, it’s not in that moment—only if the triggering event occurred. Go ahead.

44:40: Do profit interests typically earn any share of the exit value of the company? If so? Yes, okay.

45:27: And so if you think about that, compared to stock options, which is the same way stock options work, or that same dynamic that the stock needs to go up for it to be worth your while to exercise said options, is the only difference there basically we’re taught one is LLC land and one is C-Corp land? Yeah, exactly. And what about governance rights?

46:45: This is going back some, too. Well, so the question is, the scope of legal work that we’re talking about here—like employment stuff. So the questioner asks: the buyer would need to hire a lawyer who specializes in employment, and not rely solely on an attorney who specializes in M&A. Or all of this documentation for the legal contracts for employees and owners and stuff—that all can be handled by the M&A attorneys.

48:42: Are there any standard terms that are used for retention bonuses, say, six months or percentage of salary?

49:40: What about retention best practices—around to whom it’s offered? Offered to everyone, just key managers? It really has to depend—the key person, I guess, key people.

50:46: Is unvested equity for employees usually rolled over into the new ownership structure?

53:04: If implementing a non-compete for a remote employee, the applicable law is where they are—the state where they are.

53:57: So is there a specific size or employee base where engaging you guys formally makes more sense? So if the deal has more than five employees, or 10 employees, or something like that—I guess the real question is, at what point is a deal too small for it to make sense?

55:07: And do you have a threshold for what that number would be?

55:44: Steven asks: Can you clarify again your earlier point on how to model PTO into the financial model? You said something about payouts and liabilities. And then he says, I was not aware you needed to pay out PTO days when business ownership changes.

58:07: For the transition period, is it legal for the seller to work for no compensation? Or is that illegal?

58:50: FTC tried unsuccessfully to eliminate non-competes. James David, I guess you hinted at this earlier. Uh, tried unsuccessfully to eliminate non-competes. Do you know if there are actions underway to try to push this through?

1:00:25: How do you recommend approaching diligence when a key employee who will stay post-acquisition is a family member of the seller? Are there specific legal protections or deal terms you advise in such a scenario?