Want to Sell Your Business but Stay on After? Here’s What to Know

Selling your company is a huge decision. After all, you’ve invested a lot of time, effort, and emotion into its success. Immediately moving on to your next adventure might not feel right. If you’re considering staying on after selling your business, you’ll need to tell your buyer what you’d like to do.

Even though it’s a simple process, you’ll need to have confidence that the buyer will honor your wishes and not randomly change the business strategy. Establish trust by focusing on building a strong relationship with the buyer from the start. If you do that, you’ll feel more comfortable when it’s time to draft the employment agreement.

Entering an Employment Agreement

The letter of intent is critical to establish your employment agreement after the sale of your business, but that doesn’t mean it has to be complicated. All you really need to draft is a few lines about entering an agreement with the buyer. At this stage, your role post-close doesn’t need to be set in stone.

Why? Because you’re still getting to know your buyer, and they’re getting to know you. It’s possible that your ideal role will change as you talk. For instance, if you discover that you both have a lot in common, you might want to see how they take the lead. Or if you’ve built the business from the ground up, the buyer may want you to take a more active consultation role.

As long as your buyer knows you’re interested in staying on after selling your business, you can continue to discuss it throughout the sale process. At Four Pillars Investors, we want you to drive the discussion on this topic as we want to create an ideal role for you post-close.

Best Practices for Determining Your Role in the Business Post-Close

As a business owner, you want to do everything in your power to ensure the sale and leadership transition goes as smoothly as possible. Here are a few important tips for entering an employment agreement with your buyer:

1. Talk about what happens when you sell the company.

Think about how you want to be involved in the business after you sell. Do you have insights that would help the business grow? What will your workload look like in the future? What are you looking for in terms of income? Numerous factors could impact your decision. Determine what matters most to you.

2. Set expectations for your role.

After you’ve outlined what role you’re looking for, it’s time to set expectations for yourself and the buyer. Create hypothetical situations and work with the buyer to see how they would be handled. Also, document this exercise in writing and consider having your attorney include it in the transaction documents.

3. Get to know your buyer.

The goal is to get on the same page as your buyer. Talk to the owners of other businesses your buyer has purchased, if relevant. Do this before and after signing the letter of intent. Are your situations similar in terms of staying on after selling the business? Based on their stories, are you and the buyer compatible?

4. Prepare for ups and downs after the sale.

Even the best buyer-seller relationships have rough patches. If you can anticipate issues ahead of time, outline how they may be resolved in the letter of intent. Then, prepare yourself mentally for the more challenging periods. It will be tough, but challenges can strengthen your relationship over time. 

If you want to sell your business but stick around post-close, you’ll want to talk openly with your buyer. Be clear about how you see yourself involved in the business after they take over. Getting to know your buyer is the best way to ensure a successful partnership moving forward.

Let’s have an exploratory call.

Most private equity firms are focused on exploiting your company for as much monetary gain as possible. That’s not us. We want to ensure this is a mutually beneficial agreement for you, your employees, and our firm.

On our first call we would want to hear about:

• Your values, why you started this business, and what you love about it

• Your goals and hesitations in finding a potential partner for growth

• We’ll share more about our approach and the process

We will not get into financials unless you absolutely want to.