Selling a business is often a complicated process. One complicating factor for any CEO or business owner is determining what to tell employees about the pending sale, as well as when and how much. Every large-scale plan to sell the business must address this part of the process, though strategies and tactics may differ, depending upon the circumstances.
Here are suggestions on how to handle this potentially delicate situation:
Keep it to yourself.
In the early negotiating stages, before any actual sale has been made, experts counsel business owners to keep the news to themselves. Sharing incomplete information will likely alarm, rather than reassure, your workforce.
As Viking Mergers & Acquisitions notes, “Disclosing this information to your team too soon could also decrease the value of your business.” Why? Not only can this bombshell lead to “creating a panic” among employees, but “losing important members of your team can be damaging in valuing your business” and make it hard to locate “a suitable buyer to take over.”
TAB Logan owner, Marlise van der Merwe says: “Don’t communicate the sell until the paperwork is done. Tell key managers, employees first. And beforehand, prepare a few scenarios and adjust your change process to address those scenarios.”
Begin sharing the news selectively.
Some potential buyers insist upon retaining certain senior team members as part of sales negotiations. When this occurs, it can be time to share news of the sale with these senior employees and ask for a commitment to stay in their current positions. (You should also ensure they remain silent about these talks.) It may be the right time to bring these select individuals together with the buyer so they can start building their own relationships.
TAB owner, for Brisbane Inner North, Daniel Wong advises: “Wait until the deal is finalised – disclosing information while the transaction is being processed puts the sale and stability of employees at risk.”
Once it is finalised, he says: “Tell your closest associates first so that they feel important, involved, and a trusted centre of influence. These key employees in return are more likely to work with you and the new owner to ensure a smooth transition and retention of employees improving the company value.”
Offer a clear announcement when the time is right.
After the transaction has been completed, it’s vital to offer a clear, easy-to-understand announcement to your workforce. Don’t let rumours spread in the absence of hard facts and data. Be ready to provide some written documentation for employee reference, as well as ongoing meetings and/or written communications.
Crystal Petzer, of TAB Pittwater advises that it’s best to introduce the team beforehand. She says: “Set up an interview with the owner a week before for staff to meet. Then, do a month-long handover with the buyer.”
Perhaps most importantly, refrain from making promises to employees you can’t keep. Remember, when the new owner takes over, “you will no longer have control over the company,” notes NFIB. You can hope “the new owner will honour any agreements you make to protect your employees’ jobs, but they’re not obligated” to do this.
Explore the possibility of staying on.
In some situations, a CEO is invited by the new buyer to remain in their position at least during the transition period.
Offering, for example, to stay on for four to six months can help team members feel better about the sale (and their own position within the newly reconfigured leadership team).
If this is agreeable, let people know “you are still in control of the day-to-day operations and that their jobs are safe,” says AllBusiness.com. When the time does come to relinquish your post, “do it quickly and decisively.”
Celebrate the occasion with your team.
With the sale completed and the transition underway, it’s a good time to celebrate the occasion and demonstrate appreciation for all your team has done for the business. “Planning an award ceremony, party, or company outing, can be a great way” to do so, advises The Tennessee Valley Group. It also helps “put a positive spin on the company’s new ownership.”
Want to learn more about how to properly assess your business and get it prepared for sale? Register for our free TAB Boss Webinar, “How to Make Your Business Irresistibly High-Valued.”