Many sellers want to sell their business and walk away.
Be done with it.
But most of the time there will be a transition period where the seller must stay on, after the sale.
The length of time and nature of the seller’s ongoing engagement depends on a bunch of factors. This includes the nature of the business (e.g. service business), the size of the company, and the role the owner had in ongoing operations.
From the buyer’s perspective, it is good to keep the seller on for a while to help with introductions to employees, vendors, customers, etc., and to shorten the learning curve of running the business.
While the time involved will vary depending on the specifics of the business, expect a transition of at least four to eight weeks. Maybe longer. After that, a remote (telephone) consulting period of six months to a year can be expected. Further, the seller may be brought back into the business as a consultant at some pre-determined consulting rate. Sometimes, a long-term employment contract is implemented and the seller will be involved with the business for a long time after the sale.
But many sellers want to sell and “be gone”. The best way to ensure that is to develop and maintain a strong management team. Key employees should know the vendors and customers. Customers should think they are working with the company, not the owner. The more the impression is like that, the better for a quick exit by the owner.
Most importantly, having a good management team will make the business worth more.
Some owners sell but really don’t want to retire or move on. There are many reasons why this may be the case. Sometimes, the market to sell a company is too strong and the buyout offer is too good to turn down. Sometimes, the owner is just plain tired of the administrative work and dealing with regulatory government agencies. Whatever the reason, it may make sense to sell but the owner still wants to work.
In this circumstance, a long-term employment contract can be implemented to allow the owner to continue. The seller then stays active but also continues to earn an income for a while longer.
As a seller, you should know that you will likely not be able to just walk away after the closing. If you want to stay on board working in the business and still sell, consider an employment or consulting agreement with the new owners. That may be the best option for everyone.
