How to Tell Employees About a Sale

Selling a business can be a challenging and emotional process for owners. Letting go of something that has been a very significant portion of their life for years is daunting. What compounds the anxiety is determining how and when to tell employees that the company is going to be sold. While individual situations vary drastically, here are some important points to consider:

Make a Plan

Now that you’ve decided to sell your business, it is important to make a plan. You know your employees and likely how many would react if you told them what was happening.

First off, analyzing your employees can give you a better understanding of who is likely to support or oppose the upcoming changes. This allows you to make the process of management change go much more smoothly. For buyers, it is important to take the initiative to communicate the changes in the company regarding the sale. This gives them faith in your plan and makes them feel comfortable with new leadership in place.

Develop an Interior Group

There’s typically always going to be a group of people who know about the acquisition earlier than others. Who this group includes depends on a number of different factors regarding the company being sold. This group is important because they will be able to assist in the sale through management presentations and buyer due diligence. Ensuring that this small group of people are the only ones with knowledge of the acquisition before due diligence is important. This is because the process of due diligence is lengthy and if told, workers may become much less productive. Revealing the plan to sell before actually doing so could potentially jeopardize the deal. But most importantly, it gives your top managers time to adjust to the coming change, to buy in and be supportive, which will be key when the rest of the staff knows.

Think Ahead for Employees

One thing that is important to do when selling a business is to think ahead about how the acquirer plans on utilizing employees. Oftentimes, a strategic acquirer wishes to integrate the operations of the two companies. This may lead to headcount reductions as to prevent redundancies and realize synergies. Strategic acquirers may do this by shedding of some of the target company’s management or staff if they are not needed post-acquisition. This is important to take into consideration as the employees who may not be needed post-acquisition are likely to oppose it and therefore may be poor candidates to advocate for it, or may find other employment prior to the closing, thus potentially disrupting the sale.

Understand the Change in Culture

One of the aspects of the business that is bound to change post-acquisition is culture. Even if the business brand remains intact and the only change is ownership, there will likely still be a new culture that employees must adapt to. The most important thing that owners who decide to sell can do regarding this change in culture is to map out a plan to nurture acceptance for the change. You may consider putting together a team to handle this and to encourage acceptance and enthusiasm for the new management. This overall makes the process much smoother and results in more successful outcomes.

Telling Your Employees

The best time to actually inform your employees about the sale is after all contingencies have been met and is close to closure. When you’re sitting down with them to break the news, it is best to optimistic and honest. You need to instill in them confidence and faith in the new management. You may want to reinforce the fact that you chose the buyer based on their similar values and principles, making them feel assured by your decision. It is wise to do this with the buyer present. A simple scenario we tell owners to consider is to buy lunch for the staff on a Tuesday. This gives them the chance to come to work throughout the week and talk to you, express their concerns, talk to the buyer, and most importantly, remember that work and their job continues. This is strongly recommended versus telling employees Friday at 4pm. Another step you can take to make sure employees are comfortable with the change is to stay for a transition period. This means that you would still be active in the company for a short amount of time to make sure that the employees and new management develop a strong relationship.