“How do I tell my employees I’ve sold the business?”
One of the hardest parts about selling a business that all owners must face is telling their employees.
When you’ve decided it’s time to sell your business, your mind becomes preoccupied. Will I find the right buyer? How much will I get for my business? Is this the right time to sell? These are the important questions of a soon-to-be Seller, but there is another subject that is just as important – telling your employees that you have sold the business to a new owner. Employees come in all shapes and sizes and it can be hard to predict how they will react to the news and how it might affect the business.
Over time, employees can become like family and close friends. As a Seller, you do not want to upset your employees before you even know the certain fate of your company, that’s why it is always best to keep your decision to sell confidential until the business has closed. Once the business has closed and you have your cash in hand, there are ways you can explain the upcoming changes to your employees in a way that will breed positivity for all parties involved.
Close the Deal
Do not jump the gun and reveal anything to your employees prior to the deal closing. This can create a magnitude of problems that you do not need on your plate while in the midst of trying to sell. Long tenured employees become comfortable and may fear the idea of a new owner if you let them in on your decision too soon. Some employees may even refuse to work for anyone else and once you have found the buyer, this can lead to animosity or poor work performance. It is also important to wait on telling your employees until the business has closed because it is possible that your business may take longer than you expected to sell, or may not sell at all. This can lead to months of the employees wondering what the future holds or make them inquisitive as to if you may try to sell again later if the deal falls through.
Timing is Key
The best time to tell your employees that you have sold and will be moving on is the next business day after closing. The news of your sold business may hit the streets and you want them to hear the news from you, not on the internet. Also plan on telling them in the beginning of the week – learning that your boss is leaving and the direction of the company is unknown is a lot to digest right before a weekend. Plan an all staff meeting for Monday morning so that your employees have the week to digest the news, ask questions and get to know the new owner with you still in the picture.
Breaking the News
As mentioned before, an all staff meeting is recommended to reduce the chance of the employees finding out from someone other than you, or maybe getting false information. Begin by explaining to your employees that while you have enjoyed working there and watching them and the business grow and thrive, you are moving on. Be honest and tell them why. If you are burnout and want to try something new or take some time off, most people can understand that. Burnt-out business owners often experience ‘tunnel vision’ which makes them more of a hindrance to the business and prevents it from reaching its full potential. Once you have explained your reasons, it is a good idea to let the new owner take the floor. This allows the employees to see that this scary embodiment of uncertainty is actually a person who is friendly and excited to be there.
The Next Steps
Once the news is out, it is good to allow the employees some time to let it sink in. They will inevitably discuss it amongst themselves, and if any gossip arises, this is a good time for you to nip it in the bud. This time period is a great opportunity for the new owner to evaluate his team. As the new owner of the business, this is a chance for the buyer to evaluate the team with the seller on site to answer any questions. It is also recommended that the buyer schedule one-on-one meetings with all of the employees, to further reassure them and get to know their work ethics and responsibilities.
This can also be an opportunity for growth for the employee as well. Many employees get set in their ways because of the old saying, ‘this is the way we have always done it’. The new owner can challenges some of these practices and get the employee’s input on what may be a better method of accomplishing a task. The employee may also recommend other improvement methods that the new owner can use to his advantage. Turn this experience into a positive one and use it as a learning tool for the new owner and the employees alike.
Going into this situation, everyone has qualms; the seller is afraid the buyer is going to let the employees go and the buyer is afraid that the employees are going to quit. In all of the transactions I have facilitated, I have never seen a buyer react poorly to meeting employees. The new owner depends on the knowledge and experience of the employees far more than the previous owner because he has yet to learn the business. The buyer understands the value of the employees and is far more likely to work with them to come together for a better business vision. Telling your employees that you are leaving the business can be hard to confront, but as an entrepreneur, you will be able to mold this situation into a positive step forward for everyone.
-Jay Offerdahl, Vice President of Viking Mergers & Acquisitions