Seller employment or consulting > 1 year

by a searcher

1 month ago

Hi all,  

Does anyone have any experience with seller consulting or employment agreements greater than one year?   My understanding is that the 2024 SBA SOP allows these, but I am not clear on the specifics.

What factors make them feasible or not feasible - e.g., treatment as employment versus business services, variable pay components, term, etc.?  

Thanks!

1 like
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8 comments

intermediary from The University of Chicago - Booth School of Business

TMK, the only way for seller to remain involved for >12 mos., is for buyer to purchase <100% of seller company stock. I heard someone purchased 98%.

1 month ago | like reply | 0 likes

searcher from University of California, Berkeley - Haas School of Business

We did this recently in an acquisition (non-SBA). We tied an annual consulting fee to certain revenue targets for the next three years. You can call this approach a number of things, but our seller could understand the "consulting fee" arrangement.

1 month ago | like reply | 1 like

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