This article are provided for information purposes only, and are not intended as legal advice.


Buying a business – the transition

November 10th, 2008

Will the seller stay to help in the transition, if not why not.  Will the old owner be available for consulting after the initial training period.  How will you pay the old owner, salary for the initial period and hourly thereafter?  There is no set period of time that an old owner will stay on board.  I have seen acquisitions with several months being provided by the old owner, full time for the first month, 4 days per week in month 2, 2 to 3 days in month 3 and available by phone for up to a year. I also have seen a case where three young purchasers did not believe that they could learn anything from the old owner.  The old owner was asked to introduce the new owners to the staff on the day of closing and was terminated immediately after.  To me, this made no sense because you did not learn anything from a person who was in manufacturing for 25 years, presumably they could have taught the new owners something.

 

If you go to trade shows that are only once or twice a year, do you want to put in the purchase and sale agreement that the old owner will attend one with you, at all expenses paid, so that they old owner can introduce you to the buyers and sellers at the trade show?

 

Remember, even if you do not believe that the old owner is doing everything efficiently, all it takes is for you to learn one item, if this one item prevented you from making a major mistake that was done by the old owner, transition period was worth it.

 

Transition periods can be difficult, do the employees take instructions from the old owner or the new?  It causes confusion to take place amoung the staff and suppliers.  As a result, you will have to determine who much time will it take to train you and balance the knowledge with confusion caused with new and old owner running the company.


Filed under: Buy a business — Gary Landa @ 9:33 am


1 Comment »


  1. consulting franchises…

    Well spoken. I have to research more on this as it is really vital info….

    Trackback by consulting franchises — January 15, 2009 @ 6:07 am


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