What are some pros and cons of having a small business owner continue to stay involved with the business as an employee or agent of the buyer in some capacity post closing?
From a buyer’s perspective, it can be beneficial to negotiate an employment or consulting agreement with the seller to ensure his or her availability for some period of time post closing to help with transition logistics as well as employee and customer retention. Economically, such an agreement might also be a necessary and appropriate part of the overall deal to provide additional income to the seller to complement the purchase price for the business itself.
On the other hand, if the buyer is convinced that the seller’s presence will be more of a distraction or nuisance, then the buyer should either decline to include such an agreement as part of the deal or structure it such that the buyer has broad discretion to utilize seller’s services as much or as little as buyer deems appropriate (i.e., we’ll call you when we need you).
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