When should I tell my staff that I am selling my business?
This is one of the first questions that I am asked by a seller when they decide to put their business on the market.
Unfortunately there isn’t a right or wrong answer to this question. It really depends on the situation and the best person to judge when the time is right is the business owner.
When I speak with sellers about this, I find it helpful to run through the positives and the negatives of telling the staff upfront. Let have a look at these-
Positives of telling the staff upfront
- Staff will hear from you rather than someone else-There is nothing worse than the staff finding out a business is for sale from a third party. It can look like you have something to hide and create uncertainty
- You can have people through the business anytime- there is nothing better for a business buyer than seeing the business firing on all cylinders. By telling staff upfront you can show your business to a buyer when it is at its best.
- Transparency- With everything out in the open, there is nothing to hide now and you will probably rest easier
- No nasty surprises when you do find a buyer- I have seen a situation occur where a seller chose not to tell their staff the business was for sale until it was due to settle the next day. Upon informing the staff the business was sold a very key person in the business operation felt betrayed as he had been a loyal long-term employee. He quit on the spot leaving a giant hole in the business. The buyer argued that what he was purchasing had changed and he chose to walk away from the deal. The seller was left with a business with no buyer and without a key member of staff. One can only wonder what would have happened if a conversation was had upfront. It would give the seller a chance to state their intention and give reasons as to why they were selling and calm any nerves that staff members might have.
Negatives of telling the staff upfront
- There is a chance that some might leave- Human nature is to automatically think worse case scenario. Telling staff may create some uncertainty and a staff member might choose to jump early in which you would be left to find a new team member
- It could mean that the grapevine starts talking early and competitors find out- Every industry is small with everybody seemingly knowing what everyone else is doing. If you tell staff that the business is for sale you run the risk of the word spreading quickly
- If the sale does take a longer time than expected staff may consistently hound you about the sale and when it is likely to happen
- Will the Staff’s attitude change- Will they still give 100% if they know you are not going to be there in the future?
A business owner knows their staff better than anyone else and probably has the best chance of gauging how they will react.
While there is no “ideal time” to tell staff, the most important thing that needs to be reiterated to your staff is that they are a valuable asset and a new business owner is going to need them.
An incoming business owner already has a lot on their plate learning a new business. There is a lot of uncertainty for a buyer at this time and they rely on the existing staff even more so than the previous owner. In almost all situations the relationship remains the same between the new buyer and existing staff.
Reassurance from a business seller that they are all valued, their jobs are safe and the next owner will need them is what they need the most.