Compensation for seller for transition?

by a searcher

3 years ago

Seller is requesting compensation for transition (has agreed up to one year of their time to help with transition). I don't anticipate the transition taking the entire year, and am of the view that the enterprise value being paid includes time/effort to transition the business. Wanted to get feedback and creative solutions on this topic.

4 likes
263 views
9 comments

investor from Illinois Institute of Technology

Paul's comments are good. The time is dependent on how comfortable you are in this new business, possibly a new industry. I did the same, retaining one of three owners as the president for longer than necessary. As I tell clients today, the "honeymoon is over pretty quickly" for retained owners.

3 years ago | like reply | 0 likes

intermediary from Indiana University at Bloomington

Great points, another way to look at it is what did you use (and agree on) when you recast EBITDA? If he wants higher than normalized, then the recast EBITDA should go down and thus the purchase price. Can't have it both ways.

3 years ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.