Last week I got the strangest voicemail message from ‘John’ (not his real name), one of our business sellers. In a confident voice his voicemail went:
“Hi Zoran. I just wanted to tell you that our outstanding balance on that order will be fulfilled tomorrow” *click*
It was a strange message. Did he have a wrong number? No, because he referred to me by name. So what did he mean? And then it hit me.
I knew exactly what he meant….
Behind John’s voice “…our outstanding balance on that order will be fulfilled tomorrow” , was another cue to its meaning: voices. There were voices in the background; the familiar sounds of everyday life in a business. He was at work and he was sending a coded message that read:
John, like so many business sellers before him, had decided to sell and found himself leading a double life. On one hand he was working towards a big life change; selling his business. But, to his staff, he felt he had to act like it was business as usual. He was like James Bond undercover; he had secret email addresses, secret forms and files and he was sending coded messages to his business agent.
SO. What should John do? Should he retain his secret agent status or blow his cover?
To start, I should probably say that it’s different for every different business. Truthfully, for some businesses, telling your staff that you’re selling may not be the best course of action, but for others there are serious tactical benefits. So to answer this question we’ll look at the Pros and Cons of telling your staff that you’re thinking of selling.
Cons to telling your staff that you’re selling your business:
- Staff may leave, fearing for their jobs or treatment under a new owner. This could cost you money in retraining and if it happens too close to the deal could negatively affect the sale.
- It can affect your confidentiality. What if your staff tell other people? You might consider asking them to sign a Confidentiality Agreement.
- Staff may begin to slack off. If they know you’re going they might not feel they need to ‘impress’ you anymore.
- The big con is that it creates uncertainty amongst your staff who will of course be concerned about their employment future.
That last point regarding job uncertainty is potentially the most damaging, so careful management of the situation is needed to alleviate employee concerns. One-on-one, let them know that you need them for their experience and services they provide, and therefore a new owner will also need them. You may even choose to involve them in buyer enquiry process through introductions to potential buyers. Anything you can do to alleviate this uncertainty will offset the majority of the cons associated with telling your stall that you are selling your business.
Now, some of those could seriously put you off telling, particularly the confidentiality issue. If the confidentiality issue is a deal breaker for you, maybe don’t tell your staff, but don’t decide before reading the Pros…
Pros to telling your staff that you’re selling your selling:
- Staff will have time to acclimatise to the idea, lessening the likelihood of them leaving when they find out later. This information can be leveraged to improve the stability of your business in the eyes of a buyer, increasing its saleability.
- It will give you the opportunity to overcome your staff’s uncertainty through careful situation management and through introducing them to potential buyers.
- It will give you a context in which to place certain key staff members under employment contracts, again raising the stability for the potential buyers and thus increasing its saleability.
- You open up a new pool of buyers; your staff and their contacts. These are people who know the business intimately, know your customers and your suppliers. One of them may be an ideal candidate for the buyer of your business and more importantly, a CONFIDENT buyer.
- The Due Diligence process is far easier for the buyer. They don’t have to come after hours, operate in secrecy and they can actually meet the staff. This not only builds confidence for the buyer, but it will serve to set the staff at ease.
- It will give you an opportunity to train key staff for tasks that you currently fulfill. This reduces reliance on you and increases the attractiveness of the business for new buyers.
- Peace of mind. It’s done. They know. You don’t have to lead a double life anymore.
So, given all of that information, what should you do if you were in John’s position. Truthfully I can’t answer that because it comes down to your personal situation. But I can tell you the rest of John’s story…
THE BIG REVEAL
To tell you the truth, John didn’t leave a message last week. It actually happened about 10 years ago. And John wasn’t his real name. His real name was Zoran… It was me. I, Zoran Sarabaca, left that message for my solicitor at the time.
So what did I do? It was the second business that I’d owned and sold and in the end I decided to tell my staff. Amazingly, one of my staff ended up buying the business. As a side note, years later I helped him sell the business again to someone else. So for me it was the right thing to do and I have absolutely no regrets.
In the end, a business can be sold with or without the staff knowing. What you should do in your situation really comes down to a decision on case-by-case basis. So read through the Pros and Cons above and weight them up against each other. If you have any questions at all leave a comment below or feel free to contact us.
I look forward to hearing your story.
To talk to us about you personal business sales situation please don’t hesitate to call us on (02) 9817 3331 or click here to leave an enquiry.
Thank you for reading!
(PS. I hope you liked the twist)
By Zoran Sarabaca
Principal, Xcllusive Business Sales.
Sell your business with Certainty.
DISCLAIMER: The information contained in this blog is for information purposes only. It is not meant to be considered as business advice. The points of view expressed represent reactions to the current business market and it should be noted that the market may be subject to change in the future. Reader’s specific circumstances may be different and have not been taken into consideration. Always consult with your professional advisors for any business advice.