One of the most commonly pondered dilemmas when it comes to selling a business is: should you tell your employees, or at least, when is the right time to tell your employees.
On the one hand you might feel they deserve to know as soon as you have made the decision and are taking concrete steps towards a sale, particularly if many of them have been with you a long time and you feel a certain loyalty towards them.
On the other hand, what if key employees decided to leave to secure their future? That could damage the business. What if a somewhat less loyal employee (even good businesses can have them) tells a customer or supplier or even worse a competitor and rumours start to spread? That could really damage the business.
It’s not a straight-forward situation. Having been on both sides, here’s the course of action I would recommend.
- Spend some time getting really clear on what you are trying to achieve from the sale of your business for yourself, your business and for your employees. If what happens to the business after you sell is a low priority to you then you’re probably better off saying nothing to your employees until it’s absolutely necessary. If, however, you want to see the business continue and thrive as a going concern under new management with the jobs of your current team secured, then there are significant advantages to explaining this to them as soon as possible.
- Assuming the latter, figure out, with your employees, how to make the business more attractive to the kind of buyer that will help you secure their future. Things like increasing sales and profits, customer feedback, reducing risks, thorough and up to date commercial documentation, etc.
- Create a plan to improve these aspects. This will show your employees you are serious about your intention to secure their future and, by executing the plan, you’ll probably get a better price for the business as well.
- Create a list of potential buyers you think would help you achieve your goal (created in step 1). Research them and start to court (to use an old-fashioned word) the ones you would most like to sell to.
- Hold out for the right buyer that will not only give you a good deal but also secure the future of your employees. Your team will soon stop helping you, and may start hindering you, if they perceive you’re in discussions with the wrong kind of buyer.
Part of my philosophy of business is transparency. With this as a starting point, it’s not surprising that I would recommend telling your employees your intentions. If you have a culture of transparency in the first place in which everyone is respected and treated as equals, then telling them you’ve decided to sell, and what your intentions are, will only be a positive.
The chances are they already have a pretty strong inkling anyway.
One final point. Why not make selling your business a normal part of doing business? If you tell everyone, from day one, that your intention is to sell the business one day and that every activity of the business is done to achieve the best possible exit for you, your business and your employees, then when the time comes the question of telling employees is not even a question anymore – they know it’s going to happen one day anyway – you’re just telling them the day is soon.
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