For many sellers, walking away from a business to which they gave their best for many years can be very difficult. To soften the blow, a post-closing transition period may be negotiated, during which the seller stays on as a consultant or advisor. The nature and extent of his continued involvement may depend on his role with the company when he owned it. Transitions may be as short as a month or two or as long as a year. In most situations, the buyer wants the seller to remain on board to shorten the learning curve and retain key relationships with suppliers and customers.
In some instances, a long-term employment contract is negotiated and the seller maintains daily involvement for a much longer period of time.
For the owner who wants to sell the company and leave quickly, the focus should be on the development of a strong management team. Be sure to introduce key employees and members of your management team to your major customers and vendors and seek opportunities to delegate important duties. Customers should be conditioned to understand that their relationship is with the company instead of just the owner.
If you’ve established a good management team, less time will be required for the transition to the new owner. In addition, a well-developed team usually adds value to the sale.
Occasionally there are owners who want to sell but just aren’t ready to quit working. They may be looking to sell early to get a premium price while the market is in their favor or to get away from unwanted or overwhelming administrative and management duties.
Either way, long-term employment contracts can be included in the sale agreement. The seller can stay on board and work with the business a few more years while still drawing an income and benefits.
If you’re selling your business, in most cases you won’t be able to walk away the day after the sale and in most cases you probably don’t want to. Talk to your business intermediary about the true timeline of the sale and transition. If you want to sell while the price is right, but you’re not quite ready to leave immediately, consider the options available to sell now and maintain a role with the company.