Should you or should you not, tell your employees that you’re selling your business?

Losing a crucial employee can be costly to any business. Losses from the business elements that the employee is crucial for together with cost of recruitment and training of the new team member, could be measured in tens of thousands of dollars if not more. Not to mention the difficulty in explaining to buyers the sudden drop in profits due to this event and decrease in their confidence in sustainability of the future business (If the loss of one employee can cost a business so much how much will a change of ownership will cost?)

So reading the above, one could argue that there is no case to be made for telling the employees about the business sale. But lets look at this from the employee’s point of view. What they want is a good environment and income security. It is not the possible change of ownership that makes them nervous but it is the possible LOSS of their JOB that makes them nervous. They will start looking for a new job if they feel that their job security is being threatened.

So if you can assure your employees that they are necessary for the running of the business for the new owner as much as they are to you, this will reduce the chances of the loss of crucial staff through the process and you will also make the whole process much easier.

If your employees know that you are selling the business, you wont have to meet potential buyers in secrecy, the due diligence process will be so much easier, buyers will be able to talk to your employees and form a better judgment of your business.

One more point to consider, very often businesses do sell to management or employees so you never know maybe your buyer is your current employee. The only way to find out is to ask.

Zoran Sarabaca

Principal

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