My father is 100% owner of our family business and we have plans in motion for me to start acquiring the business starting in January 2026 through a typical owner-funded buyout. Our business typically does yearly sales between $9M and $12MAs of 2019, I make a salary of $175K. That includes commissions and a mid-year and EOY bonus.What’s changed since 2019? Well, most importantly, I’ve taken on responsibilities that would typically line up with that of a Vice President position (though, formally, I don’t have a title and our company doesn’t have a Vice President). I’ve helped my father, the owner, build the business almost back to where it was pre-COVID.Now that we’re recovering a bit from COVID, there’s an opportunity for me to ask for a raise that compensates me better for the new responsibilities I’ve taken on. I’m proposing a base pay of $201,250 (a 15% raise from $175K) and instead of a commission on my own sales, a 5% commission on overall company profits. This way I’m compensated fairly from the leadership-level decisions I make that affect the health of the whole company.What does everyone think?
I think it’s a bit of an odd request. He isn’t “making” your responsibilities increase, it’s happening from prepping to take over. My suggestion is, if his title is CEO, propose you change yours to COO. It will also help employees know the hierarchy and develop respect as you transition to CEO.
Why are you buying the company from your dad? Just wait for him to die and keep your money.
I have three brothers who would otherwise inherit 3/4 of the business if i didn’t purchase it from him.
What’s the timeline for you to purchase the business from your father?
Is there an agreed upon sales price on the business? Are you planning to get a loan to buy the business?
I ask because depending on how you plan to purchase the business from your father it may impact your compensation structure.
We’ll be starting the purchase in January 2026.
No, we don’t have an agreed upon sales price for the business hey. No loan. We’ll be doing a typical owner-funded buyout where he basically continues to take a salary from the business until he’s “bought out”.
Just tell your father all that and ask what he thinks.
This
Thanks. I wanted to field some outside opinions before discussing with him but so far it seems like I’m on the right track
How much is the business profiting? I noticed that you mentioned the gross revenue of the business, but we don’t know if you are operating on 10% or 30% margins.
If I were you, I’d put my focus into the business acquisition taking place in nearly 2 years to confirm that it will take place and the correct terms. If you are going to ask for a raise, that will impact the profitability and value of the company and your dad my resent that unless you have already agreed on a price.
You make a good point about my raise potentially impacting the profitability of the company. But on the flip side, if my new responsibilities are helping the company’s profitability, I want to be compensated proportionately. I think it’s fair.
There’s only so much focus I can put into the acquisition in two years. The succession plan has been in place for a while now. But if my father wants to start it earlier, I’d be up for that too.
Is this plan ironclad, in writing and with the buyout amount signed off on? I’ve seen a ton of posts where the kids think it is happening and when it comes to be that time the parents won’t give up the business.
If that is the case, sure you can ask for a raise from your dad. How far below market rate are you paying for the business in 2 years? That might be considered a deferred raise. If you are paying a hefty price, then it makes it easier to request a raise now.