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olivo-indicative-terms-fast-track.md
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Olivo — Indicative Terms (Fast-Track Zero-Cash)
Purpose: non-binding conversation draft for a potential transition/acquisition of Olivo’s client book into Brainforge using a retention-and-growth-linked structure.
Status: discussion draft only. Not legal advice.
LOI conversion framework:
- This draft must be converted through
ma-loi-playbook.mdbefore LOI issuance. - Use playbook section “Active application lane: Olivo pilot deal” as the gating checklist.
1) Deal intent
- Structure: zero cash upfront
- Objective: transfer and retain Olivo-managed client relationships under Brainforge, then grow account value via expanded services
- Timeline: 12-18 months target, hard stop at 24 months
2) Baseline assumptions (to validate in diligence)
- Starting annual transferred revenue baseline:
$500,000 - Starting gross margin assumption:
60% - Initial transferred account count:
[insert count] - Effective date:
[insert date]
Data source authority:
- Brainforge invoicing + collections system is system of record for payout calculations after transfer.
3) Consideration structure (seller payout)
All consideration is variable and paid monthly in arrears based on retained and collected revenue from transferred accounts.
A) Base share payout
- Base share rate:
25%of retained transferred revenue - Paid monthly on collected invoices only
B) Growth kicker payout
- Growth kicker rate:
12%of incremental monthly revenue above baseline run-rate - Incremental revenue must come from:
- expansion inside transferred accounts, or
- net-new transferred accounts approved in writing
C) Payout cap and term
- Target buyout threshold (total max payout):
[insert amount] - Term:
- target completion: month 12-18
- automatic extension up to month 24 if threshold not reached and retention gates are met
4) Retention gates and payout modifiers
Retention measured as cohort GRR on transferred accounts.
- GRR
< 85%: payout pause - GRR
85%-89%: pay70%of calculated monthly payout - GRR
>= 90%: pay100%of calculated monthly payout
Additional protections:
- payout only for active, paying, transferred accounts
- churned accounts removed from future payout base unless reactivated
5) Margin protection
Monthly payout protection rule:
- Total payout to seller in any month cannot exceed
55%of gross profit generated by transferred accounts in that month. - Any excess is deferred to next true-up period, subject to gate compliance.
6) Olivo operating role (separate from seller consideration)
Role intent:
- Title:
GM, Product AnalyticsorService Line Lead, Product Analytics(final title TBD) - Scope:
- relationship continuity for transferred accounts
- executive stakeholder management
- strategy and handoff quality
- support expansion motions with Brainforge team
Compensation (separate from buyout payouts):
- Base compensation:
[insert] - Performance bonus on growth/cross-sell:
[insert] - Optional billable compensation for direct delivery beyond leadership scope:
[insert]
Important:
- Employment/services compensation is not counted toward acquisition consideration unless explicitly stated.
7) Pilot-first path (recommended)
Before full transition, run one-account pilot (30-45 days):
- Pilot account:
[insert account] - Pilot success gates:
- account retained through pilot
- at least one expansion proposal accepted or in procurement
- clear handoff map from Olivo-led to Brainforge-supported execution
If pilot passes:
- move to staged transfer agreement for remaining accounts
If pilot fails:
- partnership-only or no-deal path
8) Example payout outcomes (illustrative)
Assumptions:
- base share
25% - growth kicker
12% - retention gates satisfied unless noted
| Outcome case | Annual revenue | Base payout | Growth kicker | Total annual payout |
|---|---|---|---|---|
| No growth | $500,000 | $125,000 | $0 | $125,000 |
| Moderate growth | $650,000 | $162,500 | $18,000 | $180,500 |
| Strong growth | $800,000 | $200,000 | $36,000 | $236,000 |
Reference term totals:
| Outcome case | 12 months | 18 months | 24 months |
|---|---|---|---|
| No growth | $125,000 | $187,500 | $250,000 |
| Moderate growth | $180,500 | $270,750 | $361,000 |
| Strong growth | $236,000 | $354,000 | $472,000 |
9) Diligence ask list for next step
Request light diligence pack before formal term sheet:
- 3-year revenue and margin history
- account-level revenue by month (last 12 months minimum)
- retention/churn by account
- top-client concentration breakdown
- team map and delivery dependency map
- current client contract terms and assignment constraints
10) Non-binding discussion points for tomorrow
- Is zero-cash-upfront acceptable if upside path is clear and transparent?
- Is
25%base +12%growth kicker in acceptable range? - What buyout threshold feels fair under 12-24 month fast-track terms?
- Which one account should be pilot account #1?
- What role does Olivo prefer post-transition (depth vs breadth)?
10.1 LOI readiness status (orchestrator gate)
Snapshot date: 2026-03-29
| Requirement | Status | Owner | Target date | Next action |
|---|---|---|---|---|
| Account-level trailing 12-month revenue | In progress | Deal Lead + Olivo | 2026-04-02 | Receive account-level monthly revenue export and normalize account naming |
| Account-level churn/retention evidence | Pending | Deal Lead + Olivo | 2026-04-03 | Produce account cohort retention table with churn reasons |
| Contract assignability scan | Pending | Legal/Operations Lead | 2026-04-04 | Review top-client contracts for assignment and consent language |
| Option A/B/C payout model | Pending | Finance Lead | 2026-04-05 | Build downside/base/upside model tied to retention and growth gates |
| Founder role + authority matrix | Pending | Deal Lead + Integration Lead | 2026-04-05 | Draft role charter and decision-rights matrix for transition period |
| Day 1 and Day 100 integration plan | In progress | Integration Lead | 2026-04-06 | Finalize milestones, owners, and KPI baselines |
| Top 10 deal-risk register | Pending | Deal Lead | 2026-04-05 | Draft risk register with mitigation owners and escalation triggers |
| Approver packet sign-off | Pending | Required approvers | 2026-04-07 | Route one-page LOI packet and capture formal approvals |
LOI target issue window:
- earliest:
2026-04-08 - latest (without re-planning):
2026-04-11
11) Agency investor checklist gap tracker (required before LOI)
Reference: ma-agency-investor-checklist.md
Already covered in this draft
- Deal structure hypothesis (zero cash upfront, payout formula, retention gates)
- Preliminary economics assumptions (baseline revenue, gross margin assumption)
- Initial diligence ask list (financial history, concentration, contracts, team dependency)
Critical gaps to fill with Olivo
- Company basics
- Exact services sold today by revenue mix (% by service line)
- 3-year evolution narrative (what changed, why, and with what results)
- Target operating model in Olivo’s own words (how delivery, sales, and account growth actually run)
- Client perspective and concentration
- Core client personas and top use cases
- Client acquisition motion (how hard/easy sales are, cycle length, win rate)
- Account-level retention/churn by quarter and reasons for churn
- If top clients lost the service tomorrow, practical impact and replacement risk
- Competitive positioning
- Sustainable advantage claims and evidence
- Pricing power evidence (historical price changes and retention impact)
- Competitor map (regional + specialist + platform-native alternatives)
- Partner dependency and quality of partner relationships
- Financial and cash flow quality
- Operating metrics currently monitored vs missing metrics
- Balance sheet quality and debt/obligation profile
- Working-capital methodology used today
- Accounting posture (conservative vs aggressive treatment)
- Revenue model mix (recurring, project, performance-based) by percentage
- Management quality and transition readiness
- Leadership style and decision process of current executive team
- Compensation and ownership structure for key leaders
- Evidence of management integrity and consistency
- Hiring quality and capital-allocation discipline examples
- Practical effects of introducing outside ownership/management
- Growth outlook
- Organic vs M&A growth history and contribution split
- Motivation for growth and timeline urgency
- Profitability of historical growth
- Forward growth plan (12-24 months) and execution risks
Working status
- Checklist completion:
~20%(estimate from current draft) - Critical unanswered questions:
High - Owner:
Olivo + Deal Lead - Required next step: run a dedicated checklist session and convert open items into evidence-backed answers with dates