A transition services agreement or a TSA is a type of post-closing document created between a buyer and seller of a company where seller agrees to provide his services to the new buyer in return for a fee and for a specific period of time. It is especially helpful in conditions where it takes a long time for the new company to replace the various functions in the office related to administrative, IT or accounting work which were earlier the responsibility of the parent company but are no longer done so after the sale of the business.
Transition services agreements are often related to asset purchase deals where there is diversification of a particular part of the business. The services offered to the new buyer are usually those important services in which the buyer is not qualified or where it does not have the necessary expertise. These agreements thereby help to lessen transition costs and also lead to a smooth transition, besides leading to a faster close.
Sample Transition Services Agreement
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