How to compensate a GM so they actually stick around

Happy Thursday!

Today I want to address a tricky but crucial question for the success of your acquisition:

Once you have the right GM in place, how do you actually compensate them?

Community Spotlight

Rodrigo bought a $1.25M mechanic shop and is on track for 250% ROI in year one after joining Acquisition Ace.

He went from running a Turo car rental business to owning a 32-year-old mechanic shop with clean books and strong cash flow.

👉 Want access to all the tools, calls, and people you need to succeed? Book a call with our team here.

“Even your failures can lead to ultimate success. If the marketing agency had closed, I never would have had the conversation that led to this deal.”

Darwin told me that after closing a $1.3M SaaS acquisition, with zero dollars of his own money, one week before we recorded this interview.

The Three Levers

GM compensation generally comes down to three components:

1. A base salary that reflects the scope and responsibility of the role. 

This should be competitive enough that they’re not quietly fielding calls from other employers while running your business.

2. A performance-based bonus tied to clear, measurable outcomes: revenue growth, margin improvement, customer retention, whatever matters most in that specific business.

This keeps them thinking like an owner rather than just an employee clocking hours.

3. Equity or phantom equity, which is the most powerful retention tool available but also the most significant commitment.

This is worth considering when you’ve identified someone who is genuinely irreplaceable and central to the business functioning at all.

Most of the time I’d recommend combining the first two as a baseline.

The third is optional, reserved for situations where the stakes of losing that person are high enough to warrant it.

Why this is so Important

A high-performing GM who’s running your business well is a visible target.

Other owners in the same industry will notice them, recruiters will find them, and competitors will approach them.

Beyond compensation, what actually retains a great GM is feeling like their work matters and that the business is somewhere they can grow.

If they feel like a hired hand executing someone else’s vision with no stake in the outcome, they’ll eventually find somewhere that treats them differently.

The goal is to create an environment where they think and behave like a co-owner, because that’s what produces the kind of results that make the whole acquisition model work.

(Inside Acquisition Ace, members get guidance on exactly how to structure these arrangements, including how to use phantom equity to retain key people without giving up actual ownership. To see how my community could help you secure your first business acquisition, book a call with our team here.)

What this Looks Like When it Works

Two of my students - Ben and Andrea - bought an upscale nail salon specifically because it already had strong management in place.

Rather than spending the first year buried in operations, they were able to focus immediately on marketing, backend systems, and exploring a second location.

And that’s the entire point of getting the GM piece right.

When the right person is in the right role, compensated in a way that makes them feel invested in the outcome, the whole acquisition model starts working the way it’s supposed to.

That outcome is worth spending real time and thought on getting the compensation structure right from day one.

If you’d like to talk through how to structure this for a deal you’re evaluating, or just want to learn more about how our members navigate these decisions, the Acquisition Ace community is a great place to get that guidance.

To see if it’s a good potential fit for you…

👉 Book a call with my team here and let’s get you on the fast track toward your first acquisition.