Your After-Sale Role

It's a rare buyer who won't want you to show him or her the ropes, by remaining involved with the business for a while after the sale. Often the deal won't fly unless you agree to this. At a minimum, the buyer wants to be sure that the business is indeed a going concern. But beyond that, buyers realize that most of the real business knowledge has never been written down, and when you leave, it will go with you unless the new owner takes steps to learn it from you. Often a significant part of the total cash you receive will be tied to your future involvement in the business.

After-sale involvement can take a number of different forms. The most common are the following:

• employment contracts
• consulting arrangements
• noncompete agreements

Other forms of involvement. Your future can remain tied to that of your former business in other, more indirect, ways. For example, if you've agreed to finance part of the deal, or to make part of the price dependent on an earnout, you'd be well advised to keep your eyes on the business's future performance and to be ready to act if things start to unravel.