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I Just Sold My Business - What Happens Now?

It is a rare buyer who won't want you to show her or him the ropes by remaining involved with the business for a while after the sale.  Often the deal won't fly unless you agree to this.  At a minimum, the buyer wants to be sure that the business is indeed a going concern.  In addition, buyers realize that much of the real business knowledge has never been written down, and when you leave, it will go with you unless the new owner takes steps to learn it from you?

After-sale involvement can take a number of different forms, the most common of which are an employment contract and a consulting agreement. In addition, many deals require a non-compete agreement that will prohibit you from starting a similar business nearby for a period of time. In addition to defining your after-sale role, these agreements can serve to compensate you in connection with the sale, with tax advantages for the buyer.

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/managers to your major customers and vendors and look at ways to delegate responsibilities.  The more the customers think they are interacting with “the company” versus the “owner” the easier the transition.

If you have established a good management team, less time will be required for the transition to the new owner.  Also, a well-developed team usually adds value to the sale.

After-sale involvement can take a number of different forms. The most common are the following:

  • employment contracts
  • consulting arrangements
  • non-compete agreements

Your future can remain tied to your former business in other, more indirect, ways. For example, if you've agreed to finance part of the deal, or to make part of the price dependent on an earn-out, you’d be well advised to keep your eyes on the business's future performance and to be ready to act if things start to unravel.

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 advisor 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.

Regelle Partners Inc. 2014