What is ideal seller transition structure and timeline?

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October 11, 2024

by a searcher from Colorado State University in Fairfield, CT, USA

I'm drafting an LOI and curious about the. ideal seller transition period. For those of you who have closed and transitioned successfully, what is best practice?

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Reply by a professional
from University of Michigan in Detroit, MI, USA
Hi Anon, 60-90 days at no additional cost is fairly typical. Transition is key. So make sure you agree on a comprehensive transition plan ahead of closing. The details will depend on the circumstances. (type of business, your background and experience, etc.). Many buyers also negotiate an option to extent at additional cost (often on a per hour basis). If you're relying on SBA debt and the seller isn't retaining equity, the longest the seller can be involved post close is 12 months. Happy to discuss further. DM me here or reach out directly at redacted
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Reply by a searcher
from Brigham Young University in Lehi, UT, USA
30-90 Days Full-Time: Seller stays on full-time to transfer knowledge and key relationships. 3-6 Months Part-Time: Seller shifts to part-time, available for support as needed###-###-#### Months Consulting: Keep the seller on as a consultant for occasional issues. Performance-Based Payouts: Link some of their earn-out to their involvement.
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