Consulting agreement

Definition

A paid contract keeping the seller on as an advisor, not an owner.

Why It Matters

It is how an SMB buyer defuses key-person risk without leaving the seller any ownership. A few months of the seller introducing customers and staff on a fixed fee is often worth more than an indemnity clause. SBA change-of-ownership rules cap the seller's involvement at twelve months, so the term is written to that ceiling.

In numbers: A $4M acquisition often pairs a 12-month consulting agreement near $5,000 a month, keeping the seller reachable through the first full renewal cycle instead of gone at closing.