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The decision to sell your business is never an easy one. It involves a lot of time, planning, back-channeling, and hard work. With so many moving pieces involved, you should never overlook or dread talking to your employees and clients. The conversation can either help or hurt the sale during an already stressful time. Thus, it is essential to handle it appropriately.
When consumed with the details and tasks involved with the sale, you cannot lose sight of your daily responsibilities. Continue communicating carefully with your managers, employees, customers, and other stakeholders while the deal is in progress.
The timing of your communication can either make or break the deal, so you need to proceed with caution. The mishandling of your conversations can lead to defections by managers, damaged relationships with your key customers, and uncertainty among your employees. It can also have a detrimental impact on your business or undermine the sale.
This post looks at how to tell your staff and clients about the sale of your business.
Who Do I Tell First Before the Decision to Sell My Business?
You want to tell your senior-most people first when you are confident that you wish to sell your business. In fact, you can even do it before you have lined up a buyer or members of the sales team. Your senior-most people need to get on board the sale because you will need their help to get everything in order.
However, do not tell your top managers before you figure out two key things:
- What they gain from the process
- Can they compete to buy the business?
On the first issue, you can offer a sale or stay bonus for the top team because you want them enthusiastic to make it successful. You also do not want your senior managers jumping ship because it will signal trouble for the business and can damage your deal. A bonus will also compensate the team for their hard work and long nights spent ironing out the kinks.
On the second issue, if you have already lined up a strategic buyer, there is no need to give your top management a shot at buying the business. However, if the sale is to a private equity firm, then they can mount their bids. Just realize that it could distract the team from preparing for the deal, which is counterproductive.
Who Needs to Know While the Business Is on the Market?
Appreciate that every employee and customer will eventually find out about the sale of your business. Therefore, disclosing this information should be a careful balancing act between transparency and confidentiality.
During the sale of your business, be careful only to tell the key employees first, especially those who will most likely be directly involved in the preparations and due diligence process. Telling all your employees before the sale is all but certain could lead to mixed reactions throughout the process. Consequently, employees could either preemptively jump ship or go into a holding pattern as they wait to see what happens.
As such, when selling your business, treat all the deals as covert operations until you can confidently announce to all your employees, clients, suppliers, and the world. To keep things a secret you could:
- Craft a cover story such as the business is sourcing for new financing to drive growth, which could explain all the suits suddenly flocking your office.
- Set up a war room at a hotel, your home, or an offsite office to keep the process a secret.
- Invite in a few insiders, such as from the finance department, if you need to pull together the information necessary for the sale.
- Save the sensitive information for last, even among your close circle.
- Prepare for a leak.
You also need to talk to your clients and customers but wait until you have a deal in place because they will always be skittish about such a significant change. Then arrange a face-to-face meeting with your key customers first to introduce the buyer and provide a sense of comfort, confidence, and continuity in the business.
How Best to Transition Staff After the Sale Is Imminent
By the time you nail down the purchase agreement, almost everyone by then will know that something is up. So, take the time to discuss the transition with everyone in the company. Since confidentiality is now a non-issue, it is best to take a transparent approach to the sale. You can also ease employee concerns by answering their many questions or even explaining the reasons for selling.
Take the opportunity to introduce your employees to the new owner to help ease the transition. Encourage them about the future and continuity of the business and ensure everyone that the new owner will still meet their needs with a similar level of care and understanding.
Apart from talking to your employees, also take the time to have a positive conversation with your clients to ease the inevitable bumps ahead. Finally, after signing the purchase agreement, disclose the sale to the rest of your stakeholders and the world. Ensure everyone that even though the business is changing hands, it remains committed to the ethics and concerns of the customer.
During the initial conversations, you may need all the participants to sign non-disclosure agreements to prevent the leaking of information. Prepare a statement in advance if the information does get out about the sale. It’s best to control the narrative rather than let the rumor mills or your competition churn out stories.
Why You Need a Business Broker
During the process of selling your business, confidentiality is critical to protect its value. When word gets out prematurely that you are considering selling, you risk losing key employees, vendor relationships, and customers who all add value to your business. It also affects your ability to maximize your return on selling.
Hence the need to communicate any information about the sale on a need to know basis using an experienced business broker. You must also include the buyer in all communication relevant to their involvement during the sale process.
Over to You
If you are wondering, ‘how do I sell my business in secrecy and still handle my daily responsibilities?’ Don’t fret, because this is why you need to hire a business broker to guide you through the process. A professional broker will work tirelessly to get you the best selling price while maintaining your business’ anonymity.
At NEO Business Advisors, we specialize in consulting services on issues touching on business management, growth, operations, and turnaround to the challenges your business faces today. Our business brokerage division offers industry expertise to anyone looking to sell or buy a business, including business valuations, financing, exit strategies, and any other related issues.
Contact us today for more information about how we help business owners, sellers, and prospective buyers.
Nick Fares
NEO Business Advisors
330-283-3900
www.NEOBusinessAdvisors.com