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. On an outright SBA purchase, the change-of-ownership rules let the seller stay on only as a consultant, for at most 24 months in aggregate counting any extensions, so the term is written inside that ceiling.

In numbers: A $4M acquisition might pair a 12-month consulting agreement at $5,000 a month, $60,000 in all, keeping the seller reachable through the first full renewal cycle instead of gone at closing.