You’ve been planning for this for months, maybe even years. You’ve built a great business that you’re proud of, but it’s time to retire and move on to the next phase of your life. It feels like a very personal decision, but of course, selling your business affects quite a few other people. When is the right time to tell your employees the business will be sold?
Every experienced business broker agrees that you should keep the sale confidential until the deal closes. There are plenty of good reasons for that. Here are some of them.
First, it’s possible that the sale won’t happen. A buyer may back out or fail to get financing. There are many reasons a deal might not happen; if you’ve told your staff in advance, you’ll now have to spend time explaining what went wrong. Meanwhile, they may have spent way too much time and energy worrying or speculating about the change in ownership, which takes their focus off the work to be done.
The good thing about owning a service company is that most of the staff are almost always out in the field; you don’t have to be concerned about them overhearing confidential conversations or getting curious about a flurry of unusual activity. You want to make sure they remain productive and that the company keeps making money. That’s one mistake owners sometimes make: taking their foot off the gas once they’ve decided to sell. Buyers will want to know that the company is thriving and profitable, and your employees are essential to that end.
You may also have some team members who will be upset at the idea of any change, even if it’s positive. Long-term employees may have stayed because they enjoyed working for you; it’s understandable that they’d be apprehensive about starting over with a new boss. Some workers may decide to take their chances on the market, worried about keeping their jobs under new management. Retention should be a priority for you, since your workforce is one of the assets your buyer will be purchasing.
Keeping the sale confidential also allows you to control the messaging. When you do announce the sale, it’s better if you can introduce the new owner and speak positively about their experience, attributes, and vision for the company. Ideally, you and the new owner will address the staff together, so you can present a unified front and ease staff into the changes that are happening.
So the best time to tell employees is just after the deal closes. You’ll have the timeline and plan in place (some deals include the owner staying on for a short transition period.) You can prepare your remarks in advance, making sure you’re in control of your emotions (harder than you might think) as you thank your team for their hard work and support over the years.
There is one exception to this rule, and that is if you have a “key employee.” Some contracts stipulate that a key employee (a manager, foreman, or someone with specialized talent) remain in the company for a specified period. Some buyers will want to meet the key employee and make sure they can work together well. If that’s the case, you’ll need to bring that employee in on the news of the sale early, reminding them that confidentiality is absolutely required. This may also be the case if you have family members who work in the company – you’ll have to manage both information and relationships carefully.
Telling your staff about the sale may not be easy, but it helps if you present it as a done deal. They can remain focused on the future and how they can contribute to the company’s ongoing success.