Selling a Business: When and How to Tell Employees
If you’re interested in selling your business, your compassion has probably kicked in. You know it’s more than just numbers and a building: you’ve had loyal employees who have worked with you for years, and you want to take their feelings into account.
In some ways, it feels like breaking bad news. You know things are going to change for them, and you want to present them with the information they need at the right time, in the right way. If you want the process to go smoothly, you’ll need to start thinking about your plan ahead of time.
Figure Out What’s Going to Happen First
If selling the business is only a consideration, don’t start spreading the word too soon. If you decide to keep the business or wait a few years to sell, you risk encouraging your most talented employees jumping ship prematurely. Wait until you have certainty and a clear outlook of the future before you dole out the news.
If there is an arbitrary deadline to sell the business within a certain period of time (such as situations where the owner needs to sell regardless of the offer), provide the employees with that timeline as soon as it’s become available to you. Employees will be able to use that time to contemplate what they’d like to do with the futures.
Let Them Know as Soon As You’re Sure What’s Happening
Selling a business has different implications for the fate of the employees. The person who purchases the business ultimately decides what will happen with the employees. If retaining as many employees as possible is important to you, this may be worth negotiating into the contract. Get a valuation of your business through a reputable quote service, such as Digital Exits. See if it would be feasible to take an offer less than your valuation in a way that would benefit your existing employees.
When you’re working with the buyer, find out what their plans are. If you don’t think that most of your current employees will be able to keep their positions under new ownership, give them the heads up. They’ll be able to find new employment in the meantime, so they won’t be stuck without a job. The more time they have to make plans, the better off they’ll be.
Provide Them with the Support They’re Entitled To
Employees who can’t stick around or have chosen not to will need to find other employment. It’s always helpful to offer up letters of recommendation or volunteer to be a reference for their new resume. If there are any provisions in your employee contracts that state what you will do in the event that they’re laid off or the contract is amicably terminated on your part, it’s your responsibility to fulfill those clauses.
They can still use their accumulated vacation time and sick days until the official end date of their employment. They might be entitled to compensation, and that will need to be paid out. If you have access to any helpful resources you may be able to direct them to, now as is good a time as any to make them available.
The selling of your business likely won’t be a fun affair for everyone involved, but it doesn’t have to be needlessly complicated. As long as you keep the lines of communication open and approach your employees with an understanding attitude, things will move forward as smoothly as possible.