You’ve worked your whole career for the possibility that you may one day be able to sell your company. You’ve reached that stage where you are entertaining offers from prospective buyers, and you have some important decisions to make that will have long-lasting consequences regarding your legacy.
At least through 2018, the rate of small businesses bought and sold climbed steadily, but what’s often lost in the reporting is the impact this has on employees, some who have been with companies for years and others who are just beginning their careers.
One thing we’ve learned in the last 19 months due to the pandemic is that the only constant has been uncertainty. We don’t need to tell you this as business owners, but it’s a critical consideration to bear in mind when moving forward with the sale of your company.
Below, we discuss ways to help your employees through the transition.
Be Transparent…to a Point
We often stress the importance of communication with your workforce, and we stand by that. However, when it comes to your company being sold, you have to wait for the right time to be transparent. If information is leaked, the rumor mill can kick into high gear, and next thing you know, you will have a confused and anxious staff.
So when do you say something?
Depends if the employees will be invoiced in the due diligence or not.
If they are, before the process begins, tell them what’s going on. If not, let them know once the sale date has been set.
Protect Your Employees
While you can’t predict what will happen with your employees in the long run with the new ownership, you can get the incoming brass to commit to keeping some on. Business owners often include a section in the purchase agreement stating that certain employees will have their jobs for a minimum period, typically 90 days. If protecting your employees is important to you, especially the ones with long tenures, make it clear to the new owner that you will back out of the agreement if they don’t accept these terms.
Maintain a Reserve
If you want to go the extra mile, build a reserve of funds to pay employees who are let go from the company after the 90 days. You can call this a “Just-in-Case Safe” to watch out for the wellbeing of your staff.
Support Outgoing Employees
The cold hard fact is that some jobs will be eliminated, but that doesn’t mean you can’t help employees transition out. Businesses have learned during the pandemic that flexibility is key, and this is another opportunity to practice that.
You may choose to offer flexible work hours that allow employees to schedule and participate in interviews, outplacement services, or act as a positive reference, which carries weight coming from the business owner.
Hand Off Pertinent Documents
For as smooth a transition as possible, help your employees by providing pertinent information to their new boss. This includes turning over employee handbooks, reviews of staff, org charts, job descriptions, and other important documents. The more information the next owner has, the more it can benefit your employees.
There are clichés people use that supposedly help them sleep better at night, like “That’s the cost of doing business”, or “It’s not personal; it’s business.” Those don’t help anyone, but carefully and thoughtfully planning out how to guide your employees through a time of change fulfills a kinder expression: “Generosity is currency.”