Once you have sold your business, now you must break the news to your employees. Breaking the news to your staff can be challenging, but it is crucial to be transparent and honest with them. Here are some tips for breaking the sale to your staff successfully.
Do It Only After the Sale is Complete
Repeat after me:
“No matter how tempted I am, I will only tell the employees of the sale after it is complete”.
This is for your benefit, the buyer’s benefit, and yes, the employees’ benefit.
If you polled business brokers and asked them the number one mistake, they have seen business owners make in the process of selling their business, no doubt the number one answer would be to tell the employees prior to the sale being completed. You will feel the urge to tell them because they have been loyal members of your team for many years, and you might even feel guilty about selling. But telling employees early, even if it is just a few trusted employees, often backfires with potentially damaging results. You can mess up the sale, lower the value of your business or make it more difficult for you to operate successfully if for some reason your sale does not go through.
Why is this so important? First, humans do not keep secrets well. Your one trusted employee is going to want to tell someone. Just one person….and then it spreads like wildfire. Second, humans don’t like uncertainty. They don’t know who the new owner will be, they are worried if they will have a job. So, they might start looking at or listening to offers when they normally ignore that sort of thing because they are happy. If the business is for sale…. “Maybe I should take a look elsewhere”. If you lose employees prior to the sale, it may scare a buyer away or lower the value of the business. If the sale doesn’t close for some reason, you are left with the aftermath.
Be Honest
When breaking the news to your staff, it is essential to be honest and transparent. Explain the reasons for the sale and what it means for the future of the business. Your staff will appreciate your honesty. Often, especially with older business owners, it has crossed the employees’ minds. “Just what exactly is the plan here? If the owner retires, where does that leave me?” Announcing an exciting new transition can sometimes be a relief, believe it or not.
Do It Yourself
We always recommend talking to your staff on your own before introducing the new owner. Have a staff meeting in the morning with just you and your team, and then a lunch planned where the new owner can meet everyone. That helps take the edge and the scariness off. They trust you. You are telling them it’s going to be ok.
Reassure Your Staff
Selling a business can be a stressful time for your staff, who may be concerned about job security and their future with the company. You want to assure them that you have handpicked this buyer and you believe him or her to be a good person. You would not sell the business to them otherwise. Make sure they understand that the employees are a major value of the business, and the owner values them as well. The sale is a good thing, not a bad thing. This means more opportunity, innovation, and growth for everyone. In fact, the buyer’s number one worry is that the employees might leave so everyone’s goals are aligned. Ask them to please give the new owner a fair opportunity. Give them a little time to settle in. You can also assure them that you will be around for an extended period for a smooth transition.
Celebrate Together
Take the time to thank your staff for their hard work and dedication and recognize their contributions to the success of the business. Some business owners feel compelled to give bonuses from sale proceeds to their loyal, long-term employees. That of course is up to you, but it sometimes helps with the retention topic as you talked to the buyer during due diligence. Make sure that they know that without them, the business could not function and that should give them confidence moving forward with the new owner.
If you have not already sold your business but are contemplating it, let our business brokers at Transworld assist you. We would be happy to consult with you and guide you through the process.