For many owners, one of the hardest parts of selling a business is informing their staff of the sale and impending transition. If you’re considering selling your business or need to prepare your employees for the sale of your business, we’ve got some helpful tips to make the transition easier.
When To Tell Employees of the Sale
One of the most common questions we get asked is, ”When is the best time to inform employees of the sale, and should I tell them about the sale before the deal is finalized?” There’s no standard best practice that applies to every situation because many factors influence the best time to break the news to the staff.
Telling Employees Before vs. After Closing
The first option for sellers is to tell employees immediately when deciding to sell the business. While this gives employees plenty of time to prepare, it’s generally not recommended. It presents risk since you don’t know the buyer yet, can’t answer employee questions, and will likely make employees uneasy about the uncertain future.
Most owners wait until the sale is a “lock” (i.e., the purchase and sale documents are in final form) to tell employees, which is generally the better option. For one, you’ll have more information to give employees and be able to have a more productive conversation about the implications of the sale for them and the company’s future.
Disclose to Key Staff First
Whether you tell employees about the sale before or after it’s finalized, it’s typically best to inform the key members of the staff and management first. In some cases, the buyer may need company information during due diligence that only certain employees can provide, like the CFO or accounts manager. So there’s no getting around informing them of the impending sale.
When telling key employees, be sure to let them know whether you’d like to keep the news private to prevent word of the sale from slipping out. Having key employees know about the sale before the rest of the company can help you prepare the rest of your employees for the sale of your business. These key employees can be supportive voices behind you to help explain the situation and provide a united front when the time comes.
How To Make the Announcement
When it comes time to make the announcement, it’s best to do so to all employees in person. You don’t want to be the boss that informs employees of a change of ownership over email.
Don’t inform employees of the sale on a Friday—they’ll spend the weekend worrying about their jobs instead of having the work week to figure things out.
Typically, it’s best to call an all-hands meeting of the entire company where you can inform everyone of the sale. Speak clearly, directly, and honestly, and be prepared to share all the ways that the transition will benefit the company and its employees in the future. It’s also best to have the new owner(s) there to introduce themselves to the employees and help answer the questions the staff will inevitably have.
If you’re selling your business or interested in moving on, our business brokerage services can help connect you with interested and serious buyers. Contact our staff to talk with experts and get started on selling your private practice.