You’re Selling Your Company—How to Best Share the News With Your Employees
Telling your employees that you’re selling your company isn’t an easy discussion to have—but determining when to have that conversation can be just as challenging. The biggest decision usually lies in whether or not to bring employees into the dialogue early when you decide you are going to sell or when a letter of intent has been presented; or maybe you wait until the deal is signed.
This can be a polarizing issue, and there are a lot of elements to consider. But it’s also important to understand that there’s no scientifically optimal answer as to how to inform your team—you’re taking a risk no matter how you proceed. Many people will tell you to not tell a soul until the deal is done—when faced with an information vacuum, your workers may fill the void with half-truths that can create panic should they trickle down. Others will tell you it’s like ripping off a Band-Aid—it’s best to just get it over with. If it’s kept a secret, long-time employees can end up feeling bitter or betrayed. On the other hand, sellers are petrified of the scenario where they tell people they’re being sold, only to find that things don’t pan out.
One thing is clear—there are a lot of elements to consider and every circumstance is unique. Before deciding how to move forward, sometimes it’s best to first contemplate these questions from the other side. If you were an employee of a company that was about to be sold, would you want to be told? Resoundingly, the answer that I hear is “yes.” People want to know that their company trusts and respects them enough to be forthright about the fact that their entire work life might be changing. They want to be reassured that it’s the right thing for the company, for the customers and for the employees. By reinforcing that message upfront, employees are given the peace of mind that the ownership transition is good for everybody involved.
Keeping that in mind, the next big decision is figuring out how you actually tell your employees. When that conversation is ready to take place, it has to be collaborative. If possible, both the buyer and the seller should be in the room together, having a frank, two-way dialogue with their employees about why this is a good idea for the entire business. Employees will want to know who the new owner is, what his or her background is and what changes he or she may have in store. Maybe the new owners bring increased financial strength and greater dedication to building and growing a company—let the employees know that.
But this kind of transparency does come with risks—people are inherently afraid of change. The moment employees learn about a merger, fear, uncertainty and doubt usually take hold. Your first communications priority should be to answer the “me” questions. What does this mean for me? Do I still have a job? Who do I report to? Will my benefits change? Reassure employees that the sale of a business can be a positive thing, as it doesn’t necessarily mean that a system is broken and needs fixing. Individuals who are familiar with the business-transfer process will know that a new owner usually wants to keep the employees—they’re one of the most valuable assets that a new owner is counting on to keep the business running without a hitch.
Sooner or later, you will have to tell employees about the sale of your business. Whether it’s before or after the sale may come down to a combination of factors, including the type of business you own, the type of buyer you expect to find and your relationship with employees. But no matter the conditions, honesty can go a long way. Going into this situation, everyone will have qualms—the seller, the buyer and the employees. But you have the power to mold this situation into a positive step forward for everyone. Ultimately, it’s important to remind your team that this can be an opportunity for growth—turn the sale into a positive event and use it as a learning tool for the new owner and the employees alike.
R. Scott Sutton, CFE, is vice president of Safeguard Acquisitions Inc. and vice president of franchise development for Safeguard Franchise Sales Inc. At Safeguard, Sutton is responsible for the company’s Business Acquisitions and Mergers (BAM) program. In 2014, he was named a Dealmaker of the Year Award winner given by Franchise Times® magazine. He is a board of trustee for the IFA Educational Foundation and serves as vice-chair of its strategic planning committee. Follow Sutton on Twitter @rscottsutton