Assigning Associates as part of sale

Question:

Jennifer,

I am looking to sell, and my three associates do not have assignment language in their employment agreements.  So, thank you for Tuesday’s newsletter.  What do I do now?  I didn’t really think about it, but I understand the buyer is going to need my associates as part of the deal.  

Thanks,
Dr. K
 
Answer:

I’m glad to hear identifying this problem early.  The last thing you want is for Associates to hold hostage and sale process.  To best assist, I’m going to need to see the Associate contracts and assess termination rights, restrictive covenant and assignability.  Assuming you need the associate consent to transfer their agreement it is not unusual for a seller to have to offer money to an associate for the assignment.  If the buyer prefers the associate enter into a direct contract with their entity, it’s not unusual for a seller to have to find some money for a sign on bonus or retention bonus as part of the deal.  Of course, best case scenario is not to have to worry about this problem and have the employment agreement be readily assignable on a sale of assets or equity.