Glossary
Transition period
The period after completion during which the founders or sellers remain involved in the business to hand over client relationships, knowledge and responsibilities to the buyer.
In plain English
Almost every founder led agency sale involves some transition. Its length depends on how dependent the business is on the founders, on the buyer's plans and on what the founders want. It can range from a few months of handover to several years in a leadership role, often linked to an earnout.
The terms of the transition, including role, authority, pay and what happens if it ends early, are agreed alongside the sale.
Why it matters
The transition is where the goodwill a buyer has paid for is protected or lost. It also determines what the next few years of a founder's life look like, so it deserves as much thought as the price.
What to watch for
- Decide what you want before negotiating, and be honest about it.
- Link the length of the transition to the structure of the consideration.
- Agree role, reporting and decision rights in writing.
Transaction language and legal treatment depend on the agreement and the jurisdiction. Written by Motion Advisory Partners as general guidance, not legal advice.