Buyers often require a six to twelve month transition services agreement from the founder. How should an owner scope this agreement to avoid getting dragged back into day-to-day firefighting?

Question

Tyler Smith · Accepted Answer

A transition services agreement, or TSA, is designed to transfer knowledge and stabilize client relationships, not to give the buyer a cheap interim executive. If you sign an ambiguous consulting agreement, you will quickly find yourself fielding midnight Slack messages and dealing with personnel drama without the authority to solve them.

First, establish a strict scope of work centered solely on strategic advisory functions and relationship introductions. Define exactly which seats or processes you are supporting. State clearly that you are not responsible for day-to-day operations, employee performance management, or financial execution.

Second, define your time commitment in writing. Shift the arrangement from an open-ended availability clause to a capped number of hours per week or month, with diminishing hours over time. For example, specify twenty hours per week in month one, scaling down to five hours per month by month six.

Third, institute clear approval gates for post-closing operational changes. You cannot be held accountable for performance milestones or earn-out targets if the buyer changes the operating system or strips resources from the team.

Fourth, separate your consulting compensation from purchase consideration whenever possible. You should be paid a fair market hourly or monthly retainer for your time, with a clean termination clause that allows either party to exit the consulting relationship with thirty days notice. Protect your boundaries so you can transition out gracefully.