When you transfer your business to a new owner, one of the terms of your sale may be to provide post-sale training or support to the new owner. Often, this term is in place to smooth the transition and ensure continuity of the business.
In this article, we’ll help you understand what this requirement means so you can comply with the request and help set your former business up for future success.
Post-sale training is often the option the requires the least commitment. Here, you’ll guide the new owner through your systems and processes to help them build the competencies they need to succeed in your former role.
Your responsibilities may include the following tasks:
- Providing the new owner with tutorials of each of the systems you use.
- Sharing the passwords you use.
- Helping the new owner understand your file structures and how to locate key documents.
- Explaining and demonstrating processes your business follows.
- Offering training manuals and other resources that will guide the owner through essential steps.
Depending on your agreement, training may be a one-time occurrence or an ongoing task. Refer to your agreement to understand your obligation.
Post-sale support requires more commitment. When you make this arrangement, you promise to be available to the new owner for a fixed period of time after the sale to answer questions and provide coaching through complex business tasks.
Your role may include providing training, introducing the owner to key customers and vendors, sitting in on sales calls, advising on emerging issues, and reinforcing practices essential to the business’s success.
In most cases, post-sale support lasts for up to 12 months, but in some arrangements, it can extend beyond a year. Confirm the term you’re committing to by reviewing your sales contract.
Other post-sale work arrangements
Some new owners request their predecessors to stay on staff or serve as an officer or a director. The Small Business Administration (SBA) has some rules around these arrangements, but it’s incumbent on the buyer of your business to know and adhere to them.
When SBA financing isn’t in play, it’s common for former owners to serve as a short-term employee of the business. This is usually to fulfill the terms of an earnout. Some new owners put this arrangement in place until a key contract is won or another event occurs.
Your sales contract should specify the commitment you’re required to fulfill.
After completing your post-sale training and support obligations, you may need to take steps to close your business entity. For guidance through the business closure process, log into your owner’s portal.