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When Do I Tell My Employees I'm Selling?

Posted on July 16, 2018 By

The thought of selling your business has been on your mind for quite some time, and now you have made the decision to sell. The business is ready to go and you have been working with your advisor to bring in a suitable buyer. The offer comes in and you have signed a letter of intent. The process is in motion, and this is what you have been waiting for, but what about your employees? Your exit plan has been on your mind, but your employees probably haven’t given much thought to what will happen if and when you exit the business. You have a couple options when it comes to sharing the news of your business sale to your employees.

Share Nothing:

Some business owners opt to not share the decision to sell with their employees at all. This option can be viewed as inconsiderate, but it does alleviate the risk of a mass exodus from the company. There are pros and cons to any decision, but not telling your employees right away and keeping information for yourself allows you to keep them from undue stress.

It’s important to protect the integrity of the deal and the company. This means you need to keep details under wraps. If you spill the beans to your employees, there is no guarantee that the information will stay within your company, and it could be concerning for your client base if they catch a whiff of the pending sale.

This doesn’t mean you can’t put things in place to protect your employees through a transition, of course. You just need to pay attention to their needs and ask your advisor what your options are in a sale. If you choose this route, you need to be prepared to extinguish any rumors and answer employee questions the best you can if they notice any changes taking place.

Keep Them in the Loop:

Some owners think the best policy is to be transparent with employees from the outset. The decision to sell has been made, and you are exploring options. So, you want to inform your employees what’s going on. You can be up front with employees and let them know of your plans to sell and your desire to find the right buyer for the company who will instill the same values you hold as a business leader.

This will need to be handled delicately, so your employees will remain comfortable throughout the process. You will need to drive home the initiative that you are doing what is best for the company as a whole and selling the business doesn’t mean the end of the business but rather the growth of the business. It is important to keep the conversation positive, so your employees will get on board with your plans.Let employees know you have several options to guarantee job security for them, and for those who could potentially be replaced because of redundancy, you can get severance packages. Also, if you can assure them that you plan to stay on for a transitional period while they get acclimated to the new management team, that will illustrate your loyalty to them.

The choice to be open and honest with your employees takes some stress off of your shoulders as a business owner because you don’t have to worry about keeping everything a secret. However, this can be risky for a few reasons.

First, employees talk. They might not be at ease knowing you’re considering the sale of your business, regardless of how much thought you put into your approach to sharing the news. At the end of the day, they don’t know what the future holds for them.

Second, if you tell your employees before a formal offer has been made or the sale is on track to close, you are taking the risk of revisiting this conversation multiple times, and that can incite a feeling of instability and uncertainty in your employees.

Third, customers you serve might also be brought into the loop through conversation with your employees. If customers fear that your business might not be managed in the same manner or better, they might consider going elsewhere for the services you offer. If your business production or revenue go down, that could potentially hurt your value in a sale. So, if this decision is one you are contemplating, think it through thoroughly and have these considerations in mind.

Only Tell Your Key Employees:

This is kind of an “in the middle” decision. The due diligence phase of a sale can be quite taxing on a business owner who is going through the sales process. Buyers will want to know everything about a business’s finances inside and out and having a member of your team help through that process can be rewarding.

Telling only those employees who you feel you can trust, will allow you to protect the confidentiality of the sale while still being able to find out what’s important to your staff. Your management team can help you advocate for your employees in a sale. They can tell you what your employees need most, and they can let you know what’s important for themselves as well.

It’s important to know what your employees value, so you can make sure you fight for those requests in a sale to secure their loyalty through the transition. You will need to emphasize the importance of keeping the sale confidential to those few employees you disclose the sale to, and explain that you want the sale to be a success and close smoothly. Tell your management team that there’s no need to ruffle everyone’s feathers when you plan on experiencing growth as a business.

 The Choice is Yours

Regardless of the decision you make, you need to realize that you need to do what is best for your given situation. You know where your business is and where it is heading. You know whether disclosing information early on will be detrimental for your business in terms of employee loyalty or customer retention. You have the reigns for the organization of your sale.

When it is time to consider your choices, a sell side mergers and acquisitions firm like Benchmark International can discuss all your options with you. We can help you break down what you hope to achieve in a sale and take a look at the current position of your business and discuss what’s most important to you. Perhaps, you want to make sure your employees are okay, or maybe you want to exit as fast as possible. Whatever the case may be, you can make an effective plan and have help through the entire process.

WE ARE READY WHEN YOU ARE.

Call Benchmark International today if you are interested in an exit or growth strategy or if you are interested in acquiring.

Schedule a call to speak to an Analyst

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com

Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com

Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $5B across 30 industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 13 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkcorporate.com Blog: http://blog.benchmarkcorporate.com/

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