The financial upside is that they also own 85% of the company shares, so get 85% of the profits, reducing to 20% over 20 years by selling shares back to the employees. Selling here implies they'll also make profit from that too.
Employees who'll likely withstand lower than market rate wages and/or poor conditions because of sunk-cost fallacy. Sucking up profits from both the captive businesses using software licensing, revenue, and employees (as they buy shares from the startup) is well-thought-out evil genius, OR a path towards fully automated luxury worker-led communism, but I'm guessing it's the former in the guise of the latter.
That’s how it looks on the books but it has to be part of compensation - it’s booked that way in the GL with the company paying for the shares as incentive out of earnings. Employees in these kinds of business just aren’t going to be buying stock in the company they work for.
Right, but as the small company is on the hook to buy the shares from the parent company, before passing them to the employees as comp, the parent company gets cash for their stake.
