What to Tell Employees During an Ownership Transition
BY Curtis Kroeker
Ownership transitions can be tricky. Don't exclude the backbone of the business--your employees.
Once they've decided to sell, most good business owners' next thoughts focus on the impact of this decision on their employees and their welfare. After all, it's more than a simple business transaction they're making; an ownership transition has the ability to radically change an employee's life.
That makes determining when and what to tell employees during the sale process a daunting decision. Although communicating information about the sale may be uncomfortable, it's possible to do it in a way that reassures your workforce and sets the stage for a smooth transition.
Every sale has its own unique challenges and opportunities. But generally, a few common sense strategies can help put both your employees and the new owner at ease.
1. Communicate your intentions to key employees early in the process.
Like it or not, you can't hide a pending sale from your management team or other key employees. In fact, these people will play an important role in helping you gather information for prospective buyers. Additionally, most buyers want an assurance that key employees will remain with the company after the sale. By bringing them in early, you can gauge their intentions and incentivize them to stay with the company--even if it means offering them a retention bonus. Of course, be sure that they understand the sensitivity of the selling process and be sure that you trust them to keep the decision to sell within the select group of people you choose to include in this inner-circle until you tell them otherwise.
2. Inform all employees, vendors, and large accounts immediately after the deal is a sure thing.
The process of selling a business can be like a rollercoaster ride--just when you think you've found the next owner, the buyer backs out and the process of recruiting qualified prospects starts all over again. Rather than forcing non-key employees and suppliers to ride the rollercoaster with you, it's usually best to wait until the deal is solid before you inform them that a new owner will soon be taking the helm. However, once this point is reached, inform all parties--all employees, vendors and key accounts--quickly along with the necessary messaging to build their confidence in what this means for their future.
3. Tell your employees why you're selling the company.
It's natural for employees to panic slightly at the news; they might think the worst and that their jobs are likely to go up in smoke. One of the key messages to relay along with the decision to sell is the basis of your motivation to sell. A good reason to sell will go a long way to addressing employees' concerns and build their confidence in the future. As much as possible, inform workers about how each of their positions will be affected by the change in ownership. Change is difficult, so keep the lines of communication open through the final stages of the deal.
4. Express hearty confidence in the new owner.
Employees should be introduced to the buyer before he explains his goals for the business. For the sake of your workers, it's critical to express confidence in the new owner and his ability to lead the company going forward. That starts with properly vetting your buyer, a topic I discussed in last week's column. Also, in the days and weeks following the initial introduction, the new owner should meet with employees individually or in groups so employees can express their concerns and get to know their new boss on a more personal level.
5. Describe the timeline, including when the sale will be made public.
No one likes surprises. Change requires an adjustment period and employees will react more positively to the news if they feel like they are part of the process ahead of the actual transition. The timeline you communicate should detail when the sale will be made public and when your involvement with the company will come to an end.
Selling a business is never easy. But as hard as it is for you to leave the company, remember that it will be just as hard for the valued employees who will remain with the business after your exit. By communicating as openly and as often as possible, you can minimize their discomfort and prepare your workers for the company's next stage of life.
CURTIS KROEKER is group general manager for BizBuySell.com and BizQuest.com, the Internet's largest and most heavily trafficked business-for-sale marketplaces. BizBuySell.com has more than 910,000 monthly visits. @BizBuySell