Business Brokers NJ: Article About Consulting For The Business You Sold
After you have sold your business, you discover that the new owner wants you to continue working for the company. Or maybe you sold with the intention to act as a consultant to the new owner and the business. Either way, you're not leaving the business that you built, at least not right away. But is becoming a consultant to the business you just sold always the right thing to do? It depends on what you want to get out of the deal that makes the consultancy period beneficial. Our business brokers NJ can help you determine if consulting if the best decision for you and make sure you benefit from the agreement you structure.
Sometimes offering a consulting agreement will increase the selling price. This often happens with businesses that have high profits and are highly technical when it comes to learning the business and keeping it successful. Even if most of the original employees continue working for the business, the new owner may have a few of his own employees, plus changes that he wants to make. You staying on as a consultant means you can help train the new employees in the techniques that are currently making the business successful. You can also advise the new owner on any changes and provide your opinion about what you think will or will not work. If the owner is new to the industry, he will value your input.
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If you choose to stay on as a consultant, the terms are often handled at closing in a consulting agreement. You are actually a bargaining piece and can ask for more money once you agree to consult. If you want to stay on with the company because you plan to retire but would like to stay busy, make a deal that allows you to consult for a certain time frame. This way you are not tied to the business for an extended period of time or for longer than you desire.
You can work on an as needed basis. If you are looking to make a clean break from your business but the buyer will not negotiate without the promise that you will be available for training, consider offering yourself on an as needed basis. This way you don't have to go to work everyday and can try to consult over the phone or computer. Or allot a time period of a few weeks for training, and then make yourself available on an as needed basis for a predetermined number of hours or weeks or months. These options let you bargain the selling price a little higher because you aren't leaving the business entirely.
A new owner may contact you after the sale to consult if for some reason he finds that you would be beneficial. Maybe the new owner has experienced growth or he is unable to hire a suitable replacement. Make sure that if you decide to return to work at any capacity whether it is for a few weeks or a year, draft an agreement that explicitly states the terms of the consulting or employment.