When should you tell your staff about the sale of your business?
Another question we are often asked by business owners considering a sale of their business is, do I inform the staff about the sale? And if so, when?
In most cases, the staff are told in the few days prior to completion of the deal, or even just afterwards. This is on the premise that until the deal is completed, the business has to be run as normal as though there is no imminent sale just in case it does not happen.
This said, key staff are often brought on board earlier in the process, particularly if the buyer is likely to have to rely on and work with them from day 1 after completion. They could play a significant role in making a buyer comfortable with the management team they will be taking on, and therefore the sustainability and valuation of the business in the future.
Generally, it is best to inform staff when there is a tangible buyer and a plan going forward, rather than telling them that you are putting the business on the market for sale. This avoids uncertainty whilst the business is on the market, which could be a number of months.
It is always worth having a ‘stock response’ in mind though, just in case someone pops the question to you “is the business for sale” having wondered who is visiting the premises or why you are asking the accounts department for more information than usual.
We always advertise anonymously but sometimes those who know the business may be able to guess the identity of company for sale – this is rare, but we have to strike a balance between giving prospective buyers enough information in the teaser versus giving clues to the identity of a client’s business. We will of course review with you the marketing materials we use before we put your business on the market for sale.
We normally recommend saying that you are looking for investment in order to build the business to the next level, which is in fact correct as a sale is about finding a buyer who is going to invest time and money into building the future of the business. It is also less emotive than saying yes, the business is for sale. Succession planning is an understandable reason for those who are of retirement age, and something that staff will appreciate you addressing for their future employment.
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If you are considering selling your business or acquiring a business, you may like to brush up on the terms and acronyms you will hear. Read our Glossary of Terms.