How to Tell Employees You’re Selling the Business | A businessman

The exit process is about more than numbers and contracts; it’s about the people in your organization, from the employees and front-line managers who create business value to the leadership team who deliver consensus on the right standards. Your people have always been at the heart of your organization, but their involvement in the exit process needs to be thoughtful and flexible – it requires trust and discretion. Here’s how to support them throughout the business cycle.

Before the sale – we are nothing

When should a landlord notify employees that the business is for sale? Not until the sale is completed and the buyer has legally taken possession of the property. This is the first rule: Only the owner, their transition team and maybe one key team member should know about it until the transaction is complete.

Disclosing this information prematurely can have several negative consequences:

• Leaving early: Hearing about a pending sale can cause fear and uncertainty. Employees often assume that the business is being sold because it is failing, or they are worried that they will be left behind by the new owner. They may leave before the sale is completed, damaging the company’s value.
• Legal problems: The seller must assure the buyer that the workers are in good condition. Leaving early can make this look like a lie, and the customer can sue, try to back out or otherwise damage the deal.
• Change delayed: A strong, stable team can be a key driver of value. Clients often document business emergencies to ensure that key personnel remain. If there is no strong team, the owner may need to wait for a while to facilitate the change.
• Seeking comfort: Knowing their value to the business, salespeople may seek bonuses or raises as incentives to stay. Giving them away can affect profitability and the value of sales, not to mention the unpleasant situation of feeling like a sale has been held up.

Without adequate precautions, keeping your plan under wraps can be easier said than done.

Related: 7 Essentials of Preparing to Sell a Business

To maintain confidentiality

Your company may have such a well-planted grapevine that you sometimes feel like you’re the last to hear your news. Many privacy violations occur when owners try to handle everything on their own without professional guidance. Keep your know list small by recruiting a team of experienced advisors who will ensure discretion and protect sensitive information about company operations, customers and employees.

Sometimes, you may have to inform a key employee about the sale before the process – the salesperson, the CEO or someone else. Do this as the last step of due diligence, and make sure it’s done with strict confidentiality agreements.

What if someone finds out despite your best efforts? Your answer depends on where you are in the sales process. If it’s early, you can say you’re checking deals or considering offers without actively buying a business. “Everything sells if the right offer comes along” is true but not clear enough to silence rumours. If those policies don’t work, you may have to be transparent and insist that they sign a non-disclosure agreement.

To announce the sale

Once it’s over, the conversation should be strategic and focus on the positive. If you’ve done the sales right, you shouldn’t have a problem presenting it as good news – because it will be good news:

You finally retire and find the right person to carry on your legacy. Some life changes take you to new places, and the new owner understands the team and the goal. The business is so successful that it has attracted its owner to take it to the next level.

Start by informing the management team first. Provide talking points to help their teams drive change. Then, have a full team meeting with both the seller and the buyer present. Celebrate the event, thank your employees – they are the ones whose work attracted the perfect customer – and highlight the opportunities that the new owner brings. For small companies, one-on-one meetings with each employee can address personal concerns and questions.

One of the first questions will be whether the new owner will let people go or make other significant changes. This should not be an issue unless you are a large company or corporation. Contrary to popular belief, employees are rarely allowed to enter small to medium sized businesses. Clients often want to retain employees because they are important to the success of the business. The goal is to maintain a stable and strong team after sales.

Related: Learn About Exiting – These 5 Steps You Should Take Before Selling Your Business

Training and change

The seller often trains the buyer in the business process. This transition period can take up to a year, depending on the complexity of the business. Employees may see this as an opportunity to demonstrate their value to the new owners.

New owners should avoid making major changes in the first six months. Stability helps employees adjust to new ownership without additional stress. Small, positive changes, like new benefits, can help build trust.

At least during the transition, an open door policy is necessary. It allows employees to voice their opinions and feel heard, which builds trust and can prevent small issues from escalating into major problems.

Say hello to your team

People are one of the most important drivers of value in a small to mid-sized organization, and this is true in sales. Building a solid team and demonstrating its value through proper documentation and reporting can greatly improve the value of your business. Careful planning and management of change ensures a smooth process and maintains the integrity and performance of the company.

Thoughtful preparation, strategic communication and professional guidance are the keys to successfully supporting employees when they exit a business.