The buyer is demanding a six-month Transition Services Agreement where the founder must remain as interim CEO, but they want to pay a nominal hourly rate that is far below market. How do we price and structure the TSA to ensure we are fairly compensated while protecting our operational boundaries?

Question

Tyler Smith · Accepted Answer

Buyers love to use a Transition Services Agreement as a cheap way to extend the founder's employment without paying a true executive salary. If you agree to a low hourly rate under a vague scope of work, you will find yourself working full-time hours post-close while resolving operational crises you no longer own.

To protect your time and value, you must price the TSA at a premium monthly retainer rather than an hourly rate. Your monthly fee should reflect the cost of hiring an interim, fractional CEO in the open market, plus a premium for your unique institutional knowledge.

Furthermore, define the scope of services with absolute precision. Use your EOS Accountability Chart to show exactly which responsibilities are being transitioned, and set clear weekly hour limits, such as ten hours per week. Write a steep penalty rate into the agreement for any hours that exceed this limit.

Finally, include a clear wind-down schedule where your required hours decrease every month as your successor is onboarded. This forces the buyer to take ownership of the operations quickly rather than relying on you as a safety net. By setting these strict boundaries and premium prices, you ensure you are highly compensated for your transition support while protecting your post-exit freedom.