We Sold Our Hire Division and Two Years Later My Team Still Runs Its Systems

In 2024, a company sold its tool hire division, consisting of 20 branches and 250 employees, to a specialized hire firm. The tools and systems used by both parties remained intertwined, with the buyer not having the capability to take over all operations upon the completion of the sale. To facilitate a smooth transition, a transitional services agreement was established, mandating that the company would continue operating the systems for six months while the buyer migrated the division onto their own platforms.

The agreement, reviewed two weeks prior to signing, listed the services to be provided, established a monthly fee based on the company's 2023 costs, and permitted the buyer to extend the contract for additional three-month periods upon notice. However, it failed to specify the consequences if the buyer's project delayed, nor did it allow for price adjustments.

Regrettably, the buyer's project did indeed fall behind schedule, and the company continues to manage the buyer's order processing, payroll, and email services twenty-six months since the transaction's completion.

Despite the monthly fee remaining unchanged, the cost of maintaining the systems has increased by approximately twenty percent due to rising license expenses. Two engineers now dedicate roughly one-third of their time to supporting the company they no longer own. Additionally, the company's planned upgrades have been postponed twice due to the shared nature of the order system with the buyer's operations. Any security breaches on the buyer's end would occur within the company's network, presenting significant risks.

The original sale was deemed appropriate for the business, yet the lack of a systems separation plan during the deal process proved detrimental. It is now evident that IT should have a seat at the table during any sale of a portion of the business from the initial drafting stage. The transitional agreement should include a clearly defined end date that cannot be extended without director approval, a price structure that increases with each extension, and a named exit plan provided by the buyer prior to signing.

Negotiations for these terms are currently underway for the upcoming extension of the current agreement. Companies should approach the sale of parts of their business with the assumption that IT will be among the last departments to leave.