Selling a business is fraught with all sorts of challenges. One of the most important ones is how to deal with employees. If handled thoughtfully, they can make the transition almost effortless. If handled poorly, you could end up with a deal that doesn’t close.
Do you tell them or not?
Keeping a sale confidential is critical for both seller and buyer. If the seller discloses that the business is for sale, employees might start looking elsewhere because they (understandably) fear change and worry that a buyer will eliminate their positions.
Customers may look for a new supplier because they think you’re going out of business, and vendors may change payment plans to COD! These are just a few of the obstacles when disclosing that your business is for sale. Trust us, we’ve seen it all. People love to gossip and tend to imagine only the worst!
Buyers expect that a seller will operate their business in a normal fashion until closing which can be difficult if the seller is constantly putting out the fires due to the rumor mill.
Additionally, there are legal limits to what can be disclosed to others before and after closing.
All that said, there can be exceptions to the rule of keeping a sale quiet from your staff.
If you’re ready to retire and your employees know that you’re seeking a buyer, there are ways to handle a transition to accomplish the goals of both the buyer and the seller.
Since you’ve already disclosed that you’re looking for a buyer, your staff can assist in ensuring a transition process is in place. It shows them that you’re being transparent with them and that you want to share what’s happening.
You don’t have to give a play-by-play, but try to make yourself available to them to answer anything you can.
If you can ensure that the buyer is going to keep the employees, that will be even better. It will go a long way to quelling fears they might have about having to start looking for work elsewhere.
It might also be worthwhile to have the staff write out a vision about their position and where they see themselves in the company in the coming years. The buyer will appreciate such documents. It will also give them time to think about the best way to work with these employees.
Share the wealth
Consider a transition bonus. In order to give the buyer confidence that the staff will stay in place, you can give the employees a bonus for staying on for a given period of time, say 6 months or a year.
Some business owners have even given key employees a percentage of the sale proceeds. This serves as a thank you for their years of dedication and assistance with the transition.
Continue on as normal
Regardless of your approach, it’s important as closing day approaches to continue to run your business as you normally would. Things change and deals can fall apart, so don’t be left in a lurch!