A transition services agreement (TSA) sets out services one party will provide to the other after a business sale completes. It can help the buyer operate while systems, people or supplier arrangements are being separated or replaced.
For a seller, the important question is what you are committing to after handing over the business. A general promise to “help with the transition” can leave that unclear.
What should the agreement cover?
Identify the services, who will provide them, how long they will run and how they will be charged. The agreement should also address access to systems and information, service standards, liability and how each service ends.
Check whether you can deliver what is promised. A software licence, employee arrangement or supplier contract may need separate consent before it can be used to support the buyer.
Where can sellers get caught?
- An open-ended obligation to keep helping, without a clear end date.
- Extra services being requested without a process for agreeing the change.
- Dependence on staff, systems or third parties you will no longer control.
- Liability that does not reflect the service you are providing or the agreed limits.
A handover example.
As an illustration, a seller agrees to keep running a payroll service while the buyer sets up its own system. The TSA needs to distinguish that service from employing the transferred staff or taking responsibility for the buyer’s employment decisions. It also needs an exit plan if the buyer’s system is delayed.
Read the TSA alongside the sale agreement so the obligations fit together. Our pre-sale preparation guide covers the documents and decisions to organise before the handover.
For broader transfer planning, see the Australian Government’s guide to selling a business.