Management Transition Agreement

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by a searcher from University of Virginia-Darden - Darden School of Business
in Washington, DC, USA

2yrs ago

Management Transition Agreement

I recognize that management transition terms can vary based on the buyer's experience and other industry-related factors, but I'm seeking some general guidelines for reasonable transition terms to negotiate.

How many hours per week and for how long on-site is typically expected from the previous owner? Should after-hour support or phone calls after the agreement ends be mentioned? Are there any must-have provisions I should ensure are included?

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reply by a searcher 2yrs ago
from University of Virginia in Washington, DC, USA

Good points, thank you! There's so many variables that I'm still trying to figure out where to start. In any case, sounds like it's a balancing act, like everything else, to accommodate the seller's needs with a way to leverage their knowledge in the shortest amount of time.

reply by a professional 2yrs ago
from University of Michigan in Detroit, MI, USA

Hi ^redacted‌, you've already got some great answers here, and I haven't got a lot to add. The only thing I'd mention in addition is that we see a lot of deals where the buyer gets 1-2 months of near full time transition services included in the purchase price. These deals are normally in the $1-$5MM range and include some amount of seller financing. As for the seller's precise role during that time, it is really deal specific. That said, I always advise my clients to ensure that the seller is coming in as if it is business as usual to run the organization for some amount of time post-closing. Hope that helps.