Sold my HVAC company last year and part of the deal was a 12-month consulting period. The new owner just told me he wants to cut it short at 6 months. We didn't really spell out early termination in the purchase agreement. Has anyone dealt with this? Do I still get the remaining consulting payments or does it just stop?
Consulting
What happens if the new owner wants to end consulting early?
Depends on the wording of the consulting agreement. If it's a separate exhibit, check the termination clause. Most standard templates have a 'termination for convenience' provision that lets either party walk with 30 days notice, but the payments stop.
You didnt spell it out? Ouch. That's why my lawyer charged me $800 to add two sentences about early termination. Painful check to write but worth it.
Also, did you have a separate consulting agreement or was it baked into the asset purchase agreement? The treatment is different.
Separate one-page consulting agreement. I'll dig it up. I don't remember anything about termination either way.
If there's no termination clause, he might be on the hook for the full amount unless you materially breach. But enforcing it costs money. What's the remaining amount we're talking about?
If it's small, take the six months and and go fishing. If it's big, get a lawyer. But honestly, if he's ending it early, he's probably already got what he needed from you. Not much you can do unless the contract is ironclad.
Why does he want to end it early? Did something happe? Sometimes buyers just think they don't need the seller anymore and then come crawling back two months later when a key employee quits.
This is a classic. Buyers want the seller to stay on for 12 months, then realize they don't want them around for 12 months. It's like a bad roommate situation. You think you want them there but then you don't
Agree with grease_monkey. It comes down to whether a court would imply a reasonable notice requirement. Most jurisdictions require good faith. But it's a hassle. Let us know what the agreement says.