When is the Right Time to Tell Employees You’re Selling Your Business?
When is the Right Time to Tell Employees You’re Selling Your Business?
Owners who’ve decided to sell their business often ask when the right time is to tell their employees. In my experience, the best practice by far is to wait until the sale of your business has closed – and you’re introducing your employees to the new owner.
Why?
Because the more time an employee has to worry about how such a change might affect their pay, responsibilities, or job security, the more likely they are to deal with the unknown by seeking a new position. The bottom line is that losing essential personnel can negatively impact both the value and the sale of your business.
Many owners – especially those who consider their staff family -are uncomfortable with the idea of keeping secrets. It’s important to remind yourself, however, that waiting until personnel can meet and interact with a new owner before bringing them up to speed is in the best interest of your business as a whole – and that includes the people who work there.
I would suggest that taking one or two trustworthy team members into your confidence – a general manager, or CFO for example – might be beneficial in certain situations. In fact, some buyers will want to cement relations with key personnel by bringing them into the fold early and offering them a long-term contract, equity position, or performance incentive.
In cases like these, revealing the sale of your business before it closes is at the discretion of both buyer and seller.