When buying a company, you want to make sure the transition from one owner to a new one happens as smoothly as possible. You need time with the previous owner to really dig into details to understand how and why things have been done the way they were, and you want their support with transitioning customer relationships.
That’s why it’s a good idea to come to an agreement with the previous owner to serve as a transition partner for a short period of time following the closing. The amount of time here varies from industry to industry and from business to business. Sometimes a couple of weeks is sufficient. In other cases, several months may be needed. If an extended time frame is needed, compensation arrangements can often be negotiated.
The most common agreement usually involves some time working side-by-side followed by a period of time when the seller agrees to be available by phone to answer questions, make explanations, or help troubleshoot a situation.
If the business is reliant on the seller for day-to-day operations (as opposed to a strong team) you’ll want the seller to stay around.
In many small businesses, the owner holds the key customer relationships. If that’s the case, it’s great if the seller can introduce you to key customers and explain why s/he chose to sell to you. Remember to build enough time into the transition period to make those important connections and capture all the information the owner keeps in his or her head.
Of course, it won’t be long before the seller needs to walk or (in some cases) be sent away. Once you have a good handle on everything and the old owner is gone, you can make changes and revamp the business to reflect your goals and style.
A successful transition comes down to the buyer and seller working together.