Articles

When/How Do I Tell My Employees That I Am Selling My Business?

This is often a looming question that keeps business owners up at night. Left unanswered, this question actually gets in the way of business owners moving forward on plans to transition out of their companies.

Rule One: Protect The Integrity Of The Deal

Apply strict confidentiality around the details of negotiations, agreements and involved parties until the ink dries. At the point of sale, have a communication plan prepared to deliver to your constituents that accurately reflects your company’s culture and your values.

Remember to whom you will be communicating: families of employees, customers, vendors, industry media and financial partners. Don’t confuse strict confidentiality with keeping employees in the dark. Private is useful; secretive is deceptive.

Rule Two: Protect The Integrity Of The Company

Be transparent about your vision for the company’s sustainable future after you leave. Transparency of the vision will gain employee confidence as well as mitigate the risk of employees bailing out.

Often the future leader will have a bigger vision, more capital and an updated strategy that will stimulate growth and new opportunity in ways that benefit employees.

Remember the climate has changed dramatically, and employees are not so easily alarmed by the idea of the owner selling. Just as often, they welcome the change.

When/How Do I Tell My Employees?

Apply principles of employee engagement in order to:

  • Strengthen the workforce to withstand the challenges inherent in a transaction.
  • Exploit an underutilized opportunity for value enhancement.
  • Be remembered as a leader of a great company who valued people.

Employee engagement is determined by the degree to which employees view themselves as having clear objectives, the right tools to accomplish the objectives, a feeling of being valued and a belief that they can grow. This is an often overlooked tool for increasing the value of your company.

Employee engagement is determined by the degree to which employees view themselves as having clear objectives, the right tools to accomplish the objectives, a feeling of being valued and a belief that they can grow. This is an often overlooked tool for increasing the value of your company.

Rather than focusing on the transaction, turn your attention to the transition. There is the pre-sale, which will be all about your business. There is the transaction, which is all about the deal at a point in time. And then there is your future, the most valuable possession with which you will walk away.

Good exit planning is the difference between selling a business and creating your legacy. It is a process that aligns your financial goals, business goals and personal goals, and clarifies what your success has paved the way for. Don’t worry about how you’re going to get this done right; instead, set out to do it right.

Originally published in Crain’s Cleveland Business Blog on February 13, 2013.

Download PDF Version »

Stacy Feiner

About Stacy Feiner

Dr. Stacy Feiner is an executive coach for the middle market, and author of Talent Mindset: The Business Owner’s Guide To Building Bench Strength. Stacy brings psychological strategies to business owners that help them improve their performance and advance their organizations. Stacy is a licensed psychologist, executive coach, author and national speaker » READ MORE