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Transitional periods and exiting a business

| Mar 30, 2017 | Buying & Selling Businesses |

Some North Carolina business owners may be ready to sell their company and start the next stage of the lives. If they choose to be a part of a transitional period in which they reduce their role while the new owners become acclimated to the business, it is important that they give careful consideration to what it entails.

The details of the transitional period will typically be specified as part of the purchase agreement. Potential sellers should consider both their emotional and financial needs as they begin separating from their business. Speaking with other people they trust about their financial and emotional goals before they start negotiating terms for the transition may be helpful. This includes consulting with family members, attorneys, accountants and financial advisers. When sellers are aware of their goals, they should take the necessary steps to ensure that the transition agreement includes terms that will allow them to have the type of relationship they want to maintain. This may entail including timetables and specifying exactly what their duties will be.

Even though it may be difficult to see one’s role diminish in a business they created, it is important that the sellers focus on moving on. They should also make sure that they give themselves multiple options, such as making an early exit, if they feel tempted to get reengaged into the daily operations of the business or if conflicts with the new owners begin to arise.

In addition to the emotional entanglement, selling a business can have several legal ramifications as well. There will likely be several representations and warranties that the purchaser will ask for, and an attorney who has experience with these matters can counsel sellers as to which ones are appropriate.

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