Transition Period

The transition period is the time after closing when the seller provides support to help the buyer successfully take over the business.

Transition Period Structure

Duration:

• Simple businesses: 30-60 days
• Complex businesses: 6-12 months
• Highly dependent on seller: 12-24 months

Seller Time Commitment:

• Full-time initially (2-4 weeks)
• Part-time thereafter
• On-call for questions

Transition Agreement Components

Compensation: $X per month or hourly rate
Duration: 90 days minimum, up to 12 months
Time: 20 hours/week for 30 days, then as needed
Responsibilities:
- Customer introductions
- Employee training
- Vendor relationships
- Systems and processes
- Key decisions support

Critical Transition Activities

1. Customer introductions: Face-to-face meetings
2. Employee communication: Joint announcement
3. Vendor relationships: Introduce new owner
4. Systems access: Passwords, accounts, procedures
5. Institutional knowledge: Undocumented processes

Negotiating Transition Support

Longer transition when:

• Business highly dependent on seller relationships
• Complex operations or specialized knowledge
• Seller continues to have incentives (earnout)

Shorter transition when:

• Professional management already in place
• Strong documented processes
• Seller eager to exit