The TSA Checklist: Defining Your Post-Sale Role Before You Sign
Most founders spend the majority of a sale process focused on valuation, deal terms, and due diligence. But many transactions also include a lesser-known component called a Transition Services Agreement, or TSA. In this video, Kirk Michie explains what a TSA is, why buyers use them, and how they can affect a founder’s responsibilities after closing.
What Is a Transition Services Agreement?
A Transition Services Agreement (TSA) is a temporary agreement created during an acquisition that outlines services the seller will continue providing after the business closes.
These agreements are common when a buyer needs time to transition operations, systems, personnel, or infrastructure into their own organization.
In simple terms, a TSA helps bridge the gap between ownership transfer and full operational integration.
Why TSAs Exist in M&A Transactions
Many businesses cannot be fully separated overnight. Even after closing, the buyer may still rely on the seller for operational continuity.
That can include:
Maintaining warehouse operations
Continuing manufacturing support
Supporting accounting or payroll systems
Assisting with software access and credentials
Managing third-party logistics relationships
Helping transition customer or vendor relationships
Providing founder consulting during onboarding
In some deals, the TSA is highly operational. In others, it may simply require the founder to remain available for occasional support calls.
Why Founders Should Pay Attention to TSAs
Founders sometimes assume their obligations end once the wire hits the bank account. A TSA can change that expectation significantly.
The agreement may define:
How long you remain involved
What services you are expected to provide
How quickly you must respond
Whether compensation is attached
Which employees or entities remain active post-close
A poorly defined TSA can create confusion, frustration, or unrealistic expectations after the transaction closes.
A well-structured TSA creates clarity for both sides.
TSAs Often Tie Into Post-Sale Founder Roles
Transition agreements also frequently overlap with consulting arrangements or employment agreements.
For example, a buyer may expect the founder to:
Stay involved for 3–12 months
Assist with operational handoff
Train leadership teams
Support client retention
Help maintain continuity during integration
For founders planning an immediate exit from the business, this is an important area to negotiate early.
Not Every Deal Includes a TSA
Some acquisitions are fully integrated immediately and require little post-closing support.
Others depend heavily on founder knowledge, internal relationships, or operational infrastructure that cannot easily be transferred on day one.
The more operationally complex the company is, the more likely a TSA becomes part of the process.
Final Thoughts
Transition Services Agreements are usually not controversial, but they are important. They help buyers reduce operational risk while giving founders a clearer understanding of their post-sale obligations.
The key is understanding these terms before signing definitive agreements, not after the deal closes.
Founders who plan ahead generally experience smoother transitions and fewer surprises during integration.
