Staying Onboard: 4 Strategies After Selling Your Business
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Selling your business can be one of the most significant financial and emotional events of your life. After years—or even decades—of building a company from the ground up, parting with it can feel like letting go of a piece of your identity. But the story doesn’t have to end with the sale. Many entrepreneurs find ways to stay involved in their businesses even after the transaction closes, helping to ensure a smooth transition, maintain continuity for employees and customers, and even continue deriving personal and professional satisfaction.
In this blog, we’ll explore four ways to stay on after selling your business, from formal employment arrangements to advisory roles, highlighting the benefits and challenges of each approach.
1. Employment Agreement as CEO or Executive
One of the most common ways to remain involved after selling your business is to stay on as a CEO or in another executive capacity. In many cases, buyers want the existing leadership to stay on for a transitional period to ensure business continuity.
Why It Makes Sense
Buyers are often acquiring more than just assets—they’re buying the knowledge, relationships, and expertise of the founder. Staying on as a CEO or executive allows you to:
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Preserve institutional knowledge: You know the company’s inner workings, key clients, and operational nuances better than anyone else.
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Maintain employee morale: Your presence can reassure employees during what is often an unsettling period.
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Maximize deal value: Buyers are often willing to pay more for a business when the founder is committed to staying on for a period.
Structure and Considerations
Employment arrangements typically last from one to three years, though longer agreements are possible. Compensation can include:
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Salary: Often comparable to pre-sale levels, though sometimes adjusted to reflect your new role.
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Performance bonuses: Incentives tied to revenue, profitability, or key milestones.
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Equity retention: Partial ownership or stock options may be offered to keep you motivated.
While this approach offers continuity, it’s essential to define your role clearly. Ambiguity can lead to conflicts with the new ownership, particularly if they want to implement changes you may disagree with.
2. Consulting or Advisory Role
If you prefer a lighter workload or more flexibility, transitioning into a consulting or advisory role is an excellent way to remain connected to your business. This approach allows you to provide guidance without the full responsibility of day-to-day management.
Why It Works
A founder in an advisory role can:
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Share expertise selectively: Offer strategic advice on critical issues such as growth strategies, marketing, or product development.
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Maintain relationships: Continue to interact with key clients, vendors, and stakeholders without the pressure of running the business.
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Stay engaged without burnout: Reduce workload and stress while maintaining influence over the company’s direction.
Structure and Considerations
Consulting or advisory agreements are typically flexible and may include:
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Hourly or retainer-based compensation: You get paid for your expertise without committing to a full-time schedule.
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Project-based involvement: Focus on specific initiatives, such as launching a new product line or entering a new market.
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Board membership: Serve as a formal advisor through a board seat or special committee role.
One potential challenge is striking the right balance between providing guidance and stepping back to let the new leadership run the company. Clearly defining responsibilities and expectations upfront is critical to avoiding tension.
3. Earn-Out or Performance-Based Retention
An earn-out is a financial arrangement where part of the sale price is contingent on the business meeting specific performance targets after the sale. This often involves staying involved in operations for a set period to achieve those goals.
Why Earn-Outs Are Beneficial
Earn-outs align the interests of both the buyer and the seller:
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You’re rewarded for continued success: Your ongoing involvement directly impacts the final sale price.
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Buyer gains confidence: They know you’re incentivized to ensure the company continues to thrive.
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Smooths the transition: Since your financial interests are tied to performance, you’re motivated to help the new owners succeed.
Structure and Considerations
Earn-out arrangements can vary widely but usually involve:
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Defined performance metrics: Revenue, profitability, customer retention, or other measurable KPIs.
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Set timelines: Most earn-outs last between one and three years, with milestones assessed periodically.
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Payment structure: May be lump-sum at the end of the earn-out period or incremental payments as targets are met.
The main risk is potential conflict over target definitions or operational decisions. To mitigate this, it’s crucial to have transparent reporting mechanisms and clear legal agreements outlining expectations.
4. Board Membership or Equity Retention
If you’re looking to stay involved at a strategic level rather than in daily operations, joining the board of directors or retaining a minority equity stake can be an ideal option. This allows you to influence major decisions and maintain a connection to the business without the stress of running it.
Why It Works
Board membership or equity retention enables you to:
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Influence strategic direction: Provide insight on long-term planning, investments, and governance.
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Protect legacy: Ensure the business you built continues to reflect your vision and values.
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Stay financially invested: Retaining equity allows you to benefit from the company’s future growth.
Structure and Considerations
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Board membership: May involve attending quarterly meetings, reviewing strategic plans, and offering guidance on major decisions.
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Equity retention: Retain a minority ownership stake, often subject to lock-up periods or voting agreements.
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Advisory board roles: These are less formal than the main board and often require less time commitment.
The challenge here is accepting that while you can influence decisions, the final authority rests with the new owners or management team. This requires a mindset shift—from hands-on operator to strategic advisor.
Making the Right Choice for You
Choosing how to stay on after selling your business depends on your personal goals, financial needs, and desired level of involvement. Here are a few questions to guide your decision:
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How much time and energy do you want to commit?
If you’re ready for a lighter role, consulting or advisory positions may be ideal. For hands-on involvement, an executive role or earn-out arrangement might make sense. -
What’s your risk tolerance?
Earn-outs and equity retention allow you to benefit from future growth, but they carry the risk that the company underperforms. -
What’s your ultimate goal?
Do you want to stay for financial gain, to preserve your legacy, or for personal fulfillment? Your answer will shape the structure of your post-sale involvement. -
How do you handle change and delegation?
If you struggle with letting go, roles that keep you involved in operations may be tempting, but it’s essential to respect the new owner’s authority to avoid conflict.
Final Thoughts
Selling your business doesn’t have to mean walking away entirely. Staying involved—whether as an executive, consultant, advisor, or board member—can provide continuity for your company, preserve your legacy, and offer ongoing financial and personal rewards.
Each path comes with trade-offs in terms of time, responsibility, and influence. The key is to clearly define your role, communicate expectations, and align your involvement with both your personal goals and the buyer’s objectives.
By thoughtfully considering these four approaches, you can create a post-sale arrangement that benefits everyone involved—ensuring that the business you built continues to thrive while giving you the satisfaction of staying connected to your creation.
