When planning for a sale, founders should sort out their employment or service contracts early.

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A buyer acquiring a company may want key personnel to stay on after completion to continue providing their expertise to the company. Sometimes that includes the founder.

In many deals, the sale and purchase agreement (SPA) requires the seller to deliver a signed employment or service contract with these key personnel at completion.

If the terms have not been discussed before the SPA is signed, this can become an issue.

I have seen deals delayed or parties agreeing to terms they are not entirely comfortable with just to keep the deal on track for completion.

To avoid this, I often recommend agreeing on the key terms of the service or employment contract upfront, and including them as a schedule to the SPA. It gives everyone clarity and helps ensure the relationship starts on the right note after completion.

If you are thinking of selling and the buyer wants certain people to stay on, do not postpone this conversation. It is better handled early than rushed under pressure.

#malaysiancorporatelawyer

#mergersandacquisitions

#founders

This post was first posted on LinkedIn on 22 April 2025.

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