When a business owner is in the process of selling a business, it’s easy to get caught up in the paperwork, due diligence, and meetings with advisors. Thoughts of fishing and traveling with your significant other start to creep into everyday thoughts because the end is near. However, I have a word of caution for anyone in this position.
Slow down and think of your employees.
Most business brokers will recommend telling employees about an impending sale only after the paperwork is signed, but the reality is, it doesn’t always work this way. Even if that is the intention, employees can sense a change in patterns and behavior. They may have overheard a conversation, seen sensitive paperwork, or just have a hunch. Either way, if you are that employee, it can be a scary time. After all, their job is the primary source of income from which they pay a mortgage, put food on the table, and take care of their family.
If you don’t step in and control the narrative, employees will substitute their own.
While employees can be nervous about working for a new owner, it’s important to remind them that this can be a positive experience, but it’s up to them. It’s a fresh opportunity to make a first impression. Also, since the owner is stepping into an unfamiliar environment, they will need someone to help lead them through details about how the business operates. This is a great opportunity for the employee to demonstrate their worth. When their practical expertise is on display, they will prove how valuable they are.
Remind them that they are critical to business operations and the new owner needs them. In fact, it’s a large reason why the buyer is interested in the business in the first place.
Even with reassurances, changes in key staff can happen and it absolutely can kill a pending deal. The business owner must do everything they can to NOT surprise the buyer with last-minute bad news. Get creative here. Find out what the pain is and move quickly to fix it. Many times, the situation can be salvaged by promising a retention bonus if the employee stays for an agreed period time. Depending on the situation this retention bonus can be paid by the buyer, the seller, or sometimes even both.
The truth is, if the exchange goes poorly with your employees, it can cause a problem for the buyer and send your company in a tailspin in the process. Careful planning and thought are very important when dealing with human emotions which may or may not be rational. When in doubt, talk situations through with your broker so this can be communicated to the buyer. Most are reasonable and understand that in a short time, these employees will be theirs to deal with, so they better get involved to help find a solution.
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