Clear and constant communication is an important part of operating a successful small business. But when it comes to selling your business, saying too much can seriously jeopardize your ability to seal the deal.
Clients, employees, vendors--they all have a vested interest in your company. However, confidentiality is critical for attracting the right buyers, and the premature release of information about an ownership transition can spark an exodus of customers and employees and scare away potential buyers.
So, as a business seller, one of the most important things you can do to ensure a smooth sale is to learn how and when to communicate your sale to the various stakeholders associated with your company.
Not everyone needs to know about the ownership transition at the same time. Be strategic about communication before and during the sale process, bringing only select individuals into the circle before a buyer is identified and a deal is at hand. Key employees, for example, may need to be told before the deal is done, but customers and vendors should only be made aware of the sale once the terms of the transition are in place.
Ensure key employees help your sale
Next to family members, key employees may be the next people to learn about the sale of your business--probably because these individuals may need to play a role in helping you prepare the company for the market or satisfy the due-diligence requests of a prospective buyer. Informing key employees early in the process also allows you to gauge their future intentions, and gives you time to incentivize them to remain with the business under a new owner. In some cases, key employees may also be potential buyers, so making them aware of your intention to sell could give you your first buyer lead. In the end, consider carefully whom you trust with your news, and reassure them that under new ownership, the business and employees may benefit from increased investment.
Reassure major accounts
After the transaction has closed, but before you announce the sale broadly, consider talking to major accounts (both customer and vendor) about the ownership transition to reassure them that they will continue to receive the same level of attention and service from the new owner. Later, you may want to schedule individual meetings with large clients to ease the transition by personally introducing the new owner.
Rumors and misinformation thrive when concrete details aren't available. When the time is right, provide specifics about the new owner, the transition timeline, your reasons for selling, and other critical details. Although it isn't appropriate to share certain details during the early stages of the process, circle back later to make sure all of your employees', vendors', and customers' questions are answered. This is best done through personal meetings or phone calls rather than email or word of mouth. Make sure to emphasize to your employees that the information is confidential until you can personally relay details to key customers or vendors.
Regardless of whether or not you have a financial interest in the business after the sale, it's important to express confidence in the new owner and in the company's future. Relay to employees, customers, and vendors just how much care was taken throughout the sale process to ensure the new owner is capable of continuing your tradition of success. If possible, have the new owner take part in the announcement in order to convey your trust. In the following weeks, the new owner should also meet with employees, customers, and vendors personally to answer questions and alleviate any concerns.
Properly timing the release of information isn't as easy as it sounds, and it's not uncommon for a poorly timed conversation to threaten the entire sale. For most business sellers, the best insurance against bad timing is a qualified business broker. Business brokers are experts in balancing sale confidentiality with the need to communicate openly with the people who matter to you and your company's next owner.