Advising Staff you're Selling the Business
A key issue for business owners is when to communicate the potential sale to their employees.
Sellers need to understand how important this is to staff and they will be nervous due to potential change and job uncertainty. The positives and negatives to telling staff your intentions upfront will depend on the business and relationships you have.
Positives of being upfront - If you’re honest with them they should respect you more and acclimatise to the idea knowing in advance. If staff are aware the business is being sold buyers will have confidence they are likely to stay on. It’s also a great time to negotiate/update employment contracts, offering staff incentives, extra security and raising the comfort for buyers.
If staff are aware of the sale, inspections and due diligence processes are much smoother for the buyer. Seeing a business in full swing and meeting with staff is attractive, opposed to sneaking around after hours in the dark. This builds confidence for the buyer and will help staff feel at ease.
Negatives of being upfront - Disclosing a possible sale may see staff leave and create uncertainty in the workforce. This may cost you time and money in re-training and potentially affect a sale.
Staff may also slacken off if they know you are moving on they could lose the desire to deliver. You may also need to manage the confidentiality aspect and ensure staff respect your decision and don’t disclose sensitive information.
Whilst not essential, we have found being upfront is best practice. If key staff find out from a third party you may damage relationships. Remind your staff how important they are to the business and that it’s unlikely a buyer will be want to do their job.
Ironically buyers are normally as nervous about staff leaving the business, as the staff are about getting terminated…and rarely do either happen!