When you’re in the process of selling your business, you have hundreds of details on your mind. Documentation to gather, papers to sign, meetings to attend…it can be overwhelming. But it’s important to add one more detail to your plan: when and how to tell your employees about the sale.
Timing is crucial here; you want to control the flow of information about the sale, and you certainly want to make sure it’s a done deal before you inform your employees. Telling them about your plans in advance will create unnecessary chaos and uncertainty, especially if the news gets out before the final terms of the sale contract are negotiated. You’ll want to have all the facts in hand when you speak to your team, especially those that pertain to their continued employment with the new owner.
In a tight labor market like the current one, your employees are one of the most valuable assets of your company, and you don’t want to give them a reason to walk off the job before they give the new owner a chance. You may lose some workers anyway; change is hard and unsettling, and some may have been thinking about moving on even before your announcement.
Everyone has a stake in this conversation. The buyer wants to retain every skilled employee, if possible, and get off to a positive start with their new team. The employees want to be reassured that their income and future is secure and that you’ve taken care of them as you exit the company. And you want the best for everyone – and to move on quickly to the next phase of your life with as little stress as possible.
We recommend that you consult with your buyer about the timing and logistics of the conversation with your staff. Discuss whether you should consider bonuses as incentives for key staff to stay on, paid out over six to twelve months. Make sure you are on the same page about when the transition will happen and what employees can expect after the sale.
Whatever you decide about what to tell them, when you tell them is critical. We recommend closing the sale in the morning and telling the staff in the afternoon. You may encounter a variety of emotional responses, from fear and anger to excitement about new opportunities. If you have a larger company with several locations, you might want to start with your managers, so they understand what’s happening and can support employees through the transition.
If your company is like most, the news will spread quickly, so make sure your key employees hear the news from you first and in person. By the close of the business day, make sure you’ve touched base with everyone, even if they’re offsite, so no one feels neglected in the process.
You might consider sending an email to everyone after the meetings with details like the timeline, plans for retention, and information about the new owner that might have gotten lost in the discussion. That way, everyone has the same accurate information and won’t be able to spread misinformation, intentionally or through misunderstanding what they heard. You might also need to tell them to keep the announcement confidential for a limited time while customers, suppliers, and others are notified.
The conversation framework
If possible, call an all-hands meeting with your team. This is when they will first meet the buyer.
We like following this format:
Seller: Communicate to employees how much you appreciate their help, dedication, loyalty, and friendship. Briefly explain why you’re selling. Just as the buyer wanted to know, so will your staff. Describe the timeline, including when the closing occurred, when the sale will be made public (and therefore how long confidentiality is required, if applicable), and when you, personally, will be departing (after the training period). Introduce the new owner, explaining your confidence in the buyer’s expertise and plans before turning the floor over to the buyer.
Buyer: we are pleased and excited to have the opportunity of working with such an outstanding team and business that you all have built. Yes, you have a job, I need all of you, I have heard great things, etc. (if applicable). Stress that the announcement is confidential for a limited time during which customers, suppliers, and others must be notified. Explain how employees will transfer to the buyer’s organization; the buyer’s plans for continuing business as usual (if so) and for embarking on growth plans; and plans to meet individually or in groups with employees over the coming days and weeks.
What happens if you tell them before the closing day?
We’ve had clients tell us, it’s actually cruel to tell employees too soon. We agree. Despite your good intentions, it can unnecessarily cause undue stress and anxiety. Employees may panic, share with their spouses and start rumors you cant control. Their fear of the unknown will cause them to react irrationally and look for employment elsewhere. Not only could this cause a major disruption in business, but it could also kill the deal altogether because a trained staff is a big part of company value.
This is an exciting and emotional time for you as an owner; thoughtful planning will make sure your employees take the news well so they can wish you well as you move on.