What Does New Owner Training Involve?

When you sell your business, it's common practice to provide training for the new owner.  But what does new owner training involve? What are your responsibilities? And how long will you be "on the hook" after the deal has closed?

The whole idea of training the new owner may seem alien to a seller.  After all, why would someone purchase a business they aren't capable of operating?  But in reality, people with relevant backgrounds, can and do, with limited training and experience regularly purchase small businesses. They probably have experience in either the industry or business management aspects, but maybe not both. Seller training gives them a crash course in their area of weakness and prepares them for the real world challenges of running the company on their own.

Are Business Sellers Required to Provide Training to the New Owner?

Sellers aren't automatically required to provide training.  But it is a key requirement if you are a buyer - you should require training as a condition of the sale. Even buyers with industry and management experience will want a little overlap so they can understand existing company policies, procedures, and relationships with vendors.

How Long & What Should a Seller Train a New Business Owner To Do?

Training Period Duration: The duration of the training period varies from one situation to the next. Not surprisingly, buyers often push for a longer training period while sellers are interested in minimizing the amount of time they will be forced to invest in a business they no longer own. Sufficient training for a relatively uncomplicated business (Mom and Pop establishments) could be accomplished in a couple of weeks. But training for most businesses last in the one to two month range. If the buyer still isn't comfortable after a month or two, sellers could stay longer but should be compensated for their ongoing time and effort.

Training Content: There is no set rule of thumb that describes what buyer training should cover. To a large extent, the content will be dictated by the buyer's questions and shortcomings. It's always a good idea to sit down with the buyer and lay out a plan before the training begins, even if it is something as simple as shadowing the owner for a few hours each day throughout the training period. The seller's job is not to provide free labor or surrogate leadership for the organization. Instead, the seller's role is to equip the buyer with the information s/he needs to run the company. Sooner rather than later the buyer will need to step up to the plate and lead without the safety net of the seller's presence. In reality, the buyer does want the Seller to be able to leave sooner rather than later so s/he can take the helm.

Sales Contract: Training period details are typically carefully outlined in the sales contract. The specifics described in the contract should include the length of the training period, a general statement about the content of the training, and the consequences of the seller's failure to meet training requirements. Remember: Everything is negotiable, so if you aren't comfortable with the buyer's request don't sign the sales contract until you've reached an agreement everyone can live with.


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