Staff are a valuable business asset, especially during the business sale process. Your employees’ knowledge, skills and experience all contribute towards overall business value and the price a potential buyer is prepared to offer. Considering the needs and job security of your team when selling your business is key to protecting their interests and minimising risk.
In this blog we’ll look at business sales from a people perspective, take a walk in the shoes of an employee and share three tips to guide you through the process of telling your team you’re selling up.
Why employees are crucial to a business sale
In the majority of business sales, the staff will still be there long after the business owner has left the scene, so it makes sense to prioritise their interests. The consequences of getting the people side of a company sale wrong can be highly damaging. Making a mistake can lead to unrest and loss of staff, and potentially devalue the business. In every sale there’s a risk of people seeking out alternative employment, but in a stable business this should not be cause for concern.
To achieve a successful, profitable sale, you need your team to be stable, effective and productive. Staff with specialist or in-demand skills will also add value to the sale price and encourage prospective buyers to pay top dollar for the purchase of your business.
Understanding employee sentiment
As a business owner you might feel confident and secure in the knowledge that you’ve made the right decision to sell. You’ve chosen a buyer that’s a good fit, and you know you’re doing the right thing by the company and your team. However, it’s important to remember your team doesn’t have this luxury of knowledge. People can be very unpredictable when devoid of communication and with unpredictability comes risk.
When an employee hears the news that their employer is selling the company, fear, anxiety and shock are all normal reactions. Concerns about job security, being able to support the family and future job prospects are common. You cannot predict how someone will react until the situation unfolds, but you can plan to communicate clearly and timely to stem speculation and support them through the process.
Some employees may need to know at an early stage
You will need assistance from at least some of your management team during the sale process to produce data for the buyer. This usually involves the Finance, Sales and HR functions. If your team is small, it might make sense to share the news with everyone at the same time rather than keep one or two individuals out of the loop.
If the sale is confidential and you decide not to involve the wider team at this stage, be sure to explain your reasons to those involved and ask for their discretion. Don’t let anyone pressure you to share information before you are ready.
From a legal perspective, TUPE may dictate when you have to tell your staff that the business is being sold. TUPE protects job roles in sole traders and partnerships, but if the sale is of a limited company’s shares, TUPE will not apply. The employment contract between the staff member and the company does not change. In a non-TUPE scenario this gives the owner more flexibility around when to inform staff.
Deciding at what stage to talk to staff often comes down to the competitive employment market of your business sector. For example, skilled IT staff are notoriously difficult to recruit and easy to lose, so you may choose not to share the news too early. See How to retain staff when selling your business.
Explain your reasons for selling the business
When you are ready to share your decision to sell, clear communication is vital. Honesty, clarity and transparency help to build confidence, prevent feelings of unrest and stop rumours spreading through the team.
In preparation for announcing the news, go back to the reasons why you decided to sell your business in the first place. These should form the key messages you share. Some people will understand or empathise with your reasons for selling. Those who don’t may need a little time or further support to reach an understanding – see Tip 3 below!
Tips on how to inform your team of your intention to sell
Tip 1 – Step away from business as usual
Delegate work to your management team and employees with a view to becoming an unnecessary part of the business. By supporting your staff to upskill and perform well without you, you empower your employees and build value in their roles. For more on this topic, see Are you a business owner or business manager?
Tip 2 – Tell your employees early
By informing your employees early in the sale process, you control the narrative. You have time to explain your reasons for selling, that you are looking for the perfect buyer, and that their jobs are secure. You can allay concerns and explain that a sale may take a while to achieve so nothing will change immediately. Where possible, address your team in person (use video conferencing if your team is remote). Never deliver such an important message via email.
Tip 3 – Prepare answers to possible questions
Put yourself in the shoes of an employee hearing the news for the first time and write a list of burning questions you would have. Write down honest answers to them all. If you have a HR function, they will be able to support you to prepare the questions and answers. Respond to questions in person and circulate the document to your team following your announcement. Keep your door open for further questions. This helps you to continue controlling the message, dispel myths and build confidence in your team for the future.
To tell or not to tell?
Planning when and how to inform staff of your decision to sell is a critical part of the business sale process. If you decide only to tell people when absolutely necessary, that is your choice, but it could stir up resentment from staff who feel deceived in some way. Leave it too late and the grapevine kicks into action, rumours spread, resentment builds, productivity declines, trust diminishes and staff engagement falls. Thinking through how the sale may impact your employees early on can mitigate any negative impact on productivity, engagement, and your business reputation.
For professional guidance around planning to sell your business and how to tell your employees, please get in touch with us here.
Additional reading:
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