As a business owner, you might find yourself walking on a fine line between full transparency and divulging too much information to your employees about the exit. Employees may be suspicious of what’s happening behind closed doors and begin to ask if current conversations will affect them.
Keeping the full details before the right time of telling them isn’t a bad thing. You must have all the information you need before talking to your employees about the business direction.
According to Viking Mergers & Acquisitions, “Disclosing the business sale to your team too soon could also lessen its value.” Why? Not only may this news cause anxiety among employees, but losing such key members of your team may create a dropped value of your business and make it hard to find a buyer for it.
Here are some practical tips on how you can handle this delicate situation:
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The old saying, “timing is everything,” is so true when you are selling your business. Most advisors would say that the best time to tell your employees is after the sale. You might say, “My employees are my family. In this family, we practice transparency.”
However, a business exit is a complicated process. When information is shared too early, it increases the likelihood of delay, jeopardizes client relationships. The news may even cause unpleasant feelings, negatively impacting daily business operations. The best timing would be after the sale is finalized, as this gives you full control of the conversation.
You are also in a better position to answer employee questions once you’ve sorted out all information that they need to know, such as whether they will keep their jobs, the new boss, or whether the policies will stay the same.
One thing though, it is generally better to break the news on a Monday rather than on a Friday; or at the beginning of your business week. Your employees will very likely have questions and need clarification. Usually, your employees will be with their families and friends on their days off. You don’t want them to lose that quality time worrying without having anyone to ask for clarification about the transition.
Decide about the amount of information
In a perfect world, you would be able to tell your employees everything. But this is not always the case. The amount of information that you should share depends on the culture of the business, with a heavier reliance on the nature of the business.
Full transparency can be a double-edged sword. On one hand, employees will appreciate your trust in them to handle such information, but on the other hand, they may react to every decision or step in the exit process.
There is no denying that there will also be employees who may have strong opinions. All these reactions and strong opinions, combined with the very detailed process of exiting a business, can make the process more challenging. Before you share any information, think about all the downsides it can bring to the exit process.
Of course, rumors about the sale will fly. The best thing you can do is to address the rumors head-on, rather than just ignore them. The most common way of addressing rumors is by telling your employees that you are driving the business to a state of new growth, expansion, or that there will be some form of new financing. End it by saying that you have their best interest in this new phase of the business. The bottom line is that they need to know that they still have jobs- and that this transition is far from a movie scene where all the employees get fired for a new owner to start anew.
At the very least, talk about the following:
- HR Benefits- are they going to have the same benefits?
- Length of stay- when a new owner takes over, will the service years revert to zero?
- Insurance and healthcare plans- will it be the same healthcare and insurance premiums?
These are just a fraction of what the employees may ask. You may consider gathering questions and concerns before making any announcements.
Talk to the managers or senior employees first
Say that you’ve decided on some information to share. Make sure that you disclose it first to your closest or most senior employees. They can also be the first ones to know about your plans to exit the business. These are also likely the key people who may be involved during the sale.
It is also important to make them feel that the business will be in good hands, as they are key to other employees being comfortable during this transition. Keep them in the loop with any changes that happen during the process. Prepare them for the sale and give them confidence that the business will be just fine, successfully operating without you.
Depending on whether they choose to stay, this group of key employees will build close ties with the new owner. It is also important to keep them updated with the progress, as the new owner or potential buyer may even wish to speak with them.
Once important parts of the process have been settled, you can gather the rest of the employees for the news.
Talk about the buyer
Above all, your employees will be very concerned that the business is in good hands after you exit the business. They deserve to know if their jobs are secure. Introduce the new owner once the deal is done; It is normal for emotions to run high during this time.
You might have a close relationship with your employees, and they might be keen on knowing if the new owner is a great fit for them as well. Talk about the new owner’s qualifications, work values, and even accomplishments in the area of business growth. Sharing this will give your employees a sense of comfort and security.
Understand as well that your employees may take time to get used to the new owner’s work style. The way you handle your business is unique. No two entrepreneurs are the same, so be sure to look for a buyer that is a fit for your business and the culture of the company.
Show Appreciation and Compassion
Breaking the news should be done as compassionately as possible. Take into account the unique individual characteristics of your employees. Some may be overt in their display of sadness or frustration, while others may not. Each of them will react differently. You need to be understanding of the many feelings that they will experience because of the business transition. After all, working at your company has been their livelihood.
Assure them that the new owner will take good care of them. Doing this would allow for a quicker stabilization of the business while keeping their minds at ease.
Transition can also be a time to show some love through strong gestures to your employees. Have a team-building exercise to keep things light and positive. Schedule an informal get-together so you can get a feel of how things are going for them. Just knowing their concerns are being heard lets them know they’re valuable and respected.
You can create handwritten letters outlining the things you are grateful for that have helped the business thrive. If you want to take it up a notch, some public feedback through LinkedIn may even be appreciated, only if they are comfortable with it.
Describe how their role in the company has helped you. If at all possible, provide an incentive if they manage to stay until the business transaction or sale is completed.
Remember that your employees are the lifeblood of your business. Don’t stop nurturing the relationship you’ve built with them. You may even cross paths with them in your next venture.
The Next Steps
Once the deal has been finalized, don’t just drop the mic and go. Allow space for them to absorb the news. Ensure that your employees are in place by setting a personal example. Create a transition plan for yourself and your employees. Communicate the exact date of the business takeover.
While waiting for that date, let them know you are still in control of the operations. From time to time, assure them that their jobs are safe. Express to them that you’ve created a business that will thrive even without you as an owner. This may also be an opportunity for the new owner to have one-on-one meetings with them to address worries or rumors that could affect the business’ stability.
You may also bring in an advisor to answer the questions of your curious employees. Exit advisors are vital people with a deeper understanding of the sensitivities of a business exit. They can offer guidance from the decision-making for the sale up to managing employees’ concerns and expectations upon the close of the sale.
The closure of a deal is a momentous occasion for the seller, but it can also be a terrifying experience for the employees. The goal is for you to ensure that the transition is as seamless as possible and that the sale will not cause any reason for panic for your employees.