As the volume of merger transactions continues to be large and many transactions are being closed in a relatively short time frame, transition service agreements (TSAs) are being used more frequently. A TSA is an agreement that allows for a transition of the seller’s operations after the closing, by setting a period of time that the seller will continue to operate the business for the benefit of the purchaser. Typical services provided by the seller during the transition period include warehousing, shipping and invoicing. The need for the TSA often arises because one or both parties need to close faster than time will allow for the business to be transitioned before closing. TSAs can be used in all sizes of transactions and between purchasers and sellers of different sizes. For example, in a transaction I worked on this past summer, the largest global player its industry acquired a small local business and requested that the local business provide transition services. In an ongoing transaction, a local company I am working with is negotiating to purchase an international brand of consumer products and is negotiating a TSA with the international seller of the brand. Many important details need to be worked out in a TSA, including the flow of money, the compensation that the seller will receive for the transition services, if any, and insurance. But if a business sale needs to close quickly, a TSA can be a valuable tool.

If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.

ABOUT GLENN D. SOLOMON

gsolomon@offitkurman.com | 443-738-1522

Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 170 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our twelve offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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