The buyer is insisting on a six-month Transition Services Agreement that includes our key leadership team, but they want us to provide these services at cost. How do we price and structure the TSA to protect our margins and our team's capacity?

Question

Tyler Smith · Accepted Answer

Buyers frequently use a Transition Services Agreement to ensure a smooth handoff, but they often try to treat it as a free extension of the transaction. If you agree to provide leadership support at cost, you are subsidizing their operational onboarding while distracting your team from their primary objectives.

To protect your margins and your team's sanity, you must price the TSA as a professional services engagement, not an administrative favor. Calculate the fully burdened cost of every employee involved, including salary, benefits, overhead, and a healthy profit margin of at least twenty to thirty percent. If the buyer wants your expertise, they must pay market rates for it.

Furthermore, define the scope of the TSA with extreme precision. Create a detailed schedule that specifies the exact tasks, deliverables, and maximum hours per week for each transition service. Anything outside this pre-approved scope must trigger a punitive hourly rate. Use your EOS Accountability Chart to determine who has the capacity to assist without neglecting their core seats and daily responsibilities.

Your leadership team must still hit their quarterly Rocks and run their weekly Level 10 Meetings. If the transition work begins to cannibalize their operational focus, the business will suffer. By setting strict hourly caps and pricing the TSA to reflect the true value of your team's time, you incentivize the buyer to complete the transition as quickly as possible and ensure you are fairly compensated for every hour of support.