One of the most common questions I hear from business owners as they consider selling their business is, “What will happen to my employees?” or “How do I take care of my staff?” Small business owners in particular have a special loyalty with their staff and management, and that weighs heavily on an owner when it’s time to sell.
Here at Viking, we have closed sales on more than 700 businesses over the past 25 years, the vast majority of which (96%) are still in business today. Throughout our experience, we have identified the two main influences over what happens to your staff when you sell your business.
In order to facilitate the best outcome for your employees, your company, and yourself, follow these two tips:
1. Keep it Confidential (To Avoid Alarm)
There are several reasons why confidentiality is essential when selling a business. Most reasons are directly related to the integrity of the selling process, but at the top of the list is your staff’s protection. Even if you have historically operated your business with an open-door policy, you absolutely should not include discussions about selling the business.
Prematurely disclosing your intention to sell can lead to panic within your organization and can hinder your relationship with your employees. Although keeping your employees in the dark about a prospective sale may sound counterintuitive in regard to maintaining your relationship with them, stirring up uncertainty about their status with you and their future with the organization is normally far more detrimental.
Do not forget the element of the unknown in the sales process itself. Telling employees about a prospective sale can lead to anguish and fear that ultimately can turn out to be completely unnecessary if a sale does not reach closing. Protect your staff from the inherent uncertainty of the sales process by remembering that the deal is not done until the sale is closed.
You may need to involve a few key employees to help with the process of selling your business. Most likely these would be your accountant or perhaps a senior level manager. You will want to handle this delicately and ensure these employees understand the need for discretion and complete confidentiality. In this scenario, you may also want to consider asking these key employees to sign a business sale confidentiality agreement, or non-disclosure agreement (NDA).
Read more about when to tell employees you are selling the business in this article.
2. Hire a Business Broker (To Find a Well-Matched Buyer)
Among many other things, business brokers can help you avoid an organizational mismatch. Finding the right buyer is partly a result of having access to a larger buyer pool that business brokers can offer, but it also has to do with years of experience and insight into both sides of the buying and selling process. At Viking, we understand that the right buyer offers more than just the right price. Finding the buyer who will be a good fit for your company is essential as well.
We are not recommending that you dictate to the buyer that keeping all of your employees on staff is part of the deal. It is wise to consider the purchase from the buyer’s perspective, and a buyer will not have the existing relationship or inherent loyalty to your employees that you have. A business broker who has experience on both sides of the closing table can help provide this balance to the perspective.
The better approach is to evaluate which buyer displays the most integrity and trustworthiness, and additionally, who has conveyed a general plan of operations that closely resembles your expectations. If a buyer intends to operate your business in a manner similar to your current operations, then your employees will very likely continue to work for the company after closing. Keep in mind that in this scenario, your employees (in whom you have invested significant time and resources training and developing) are a valuable part of what the buyer is acquiring. A business broker can help identify the buyer who will be the best match in light of your goals and expectations for the company post-closing.
If you are thinking about selling your business, and especially if you are thinking about how that will affect your employees, we are here to help. In addition to our 25+ years of experience, over 50% of our staff have been business owners themselves. We have been in your shoes, and we are committed to putting our experience to work for your business. Get in touch with Viking today for a complimentary consultation with one of our team members.