Video 5 – How Long Does An Owner Have To Stay On Once They Have Sold Their Business?

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Rob Goddard:

So big question from any potential sellers, how long have I got to stay on with a new owner after I’ve sold my shares to them?

Steve Barry:

Yeah.

Rob Goddard:

I’ll sell that one.

Steve Barry:

Well, again, the vendor has a choice in terms of whether they want to leave quickly as in a period of months or whether they want to stay around for longer. As a general rule of thumb, I would say a reality check is the investors or acquirers will pay for today’s value today and their idea will be that they’ll pay for tomorrow’s value in the future. And so there are ways in which that can be structured to make that work for the vendor to try to whether to make that work over six months or a year, or possibly longer. But actually, it’s down to the vendor to decide and the extent to which they want to participate in the future story of the business with the new owner.

Mike Whittle:

Yeah. Sometimes it’s because the vendor’s inspired by the journey that the acquirer wants to go on with their business. So sometimes it’s not a question of how long is mandated, it’s how long is good for both parties. Typically, within the deal where Steve says the seller is looking for a clean exit, and mostly that will involve a handover of some description, typically six months of transition handover before they’re able to step back. But sometimes they’re inspired by the journey the acquirer wants to go on and they want to stay. And quite often, particularly in some recent transactions, that’s been the case. They’ve rolled over investment and stayed on with the new acquirer.

Rob Goddard:

Yeah, absolutely. One of Steve’s transactions, I remember his client at the outset said she wouldn’t stay more than a month and ended up signing up for four years and sold to a private equity company, the community that she said she wouldn’t sell to.

Steve Barry:

And it would be fair to say that she had fallen back in love with the business.

Rob Goddard:

She did. She did. Yeah. Brilliant.

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