Need to Know Basis
The process of selling a business isn’t easy. No one really knows what the final outcome will be. Nor can anyone guarantee what will happen after the sale. So even though you may want to be open and honest with all of your employees about your intentions, that isn’t always practical.
Instead, tell as few people as possible about your plans and swear them to secrecy. As more people learn about your plans, hints are likely to leak out and fuel rumors and gossip. Rumors are distracting and often provoke an unnecessary sense of fear and uncertainty.
These feelings can be strong enough to hamper the steady levels of productivity and financial performance that you will need to attract buyers and close the deal.
Who Needs to Know
Don’t tell anyone about your plans until you fully understand what the process of selling a business entails. Don’t inform anyone on your staff until you have talked with valuation experts, tax advisors, industrial psychologists, and others experienced with due diligence. This will help you give more accurate answers to senior-level staffers and family members who ask, “How is this going to affect me?”
When you feel ready to take the first steps toward selling your business, you must tell at least a few people of your plans. Typically, this group will include your CFO, executive assistant, and perhaps one or two senior-level managers who report directly to you.
Without their help, you may not be able to gather all of the nitty-gritty details and reports that you will need to present in order to attract a buyer and receive a letter of intent to buy the business. When the due diligence process kicks into gear, everything will go much faster if your team has already gathered the types of reports that will be requested.
At the same time, you will need your leadership team to continue to run the business..They can’t excel in the day-to-day operations of your business if they are constantly being swamped with requests for the quick delivery of granular details about your business.
Calm Their Fears
Managers who have never experienced a change in business ownership may be likely to immediately fear the worst. They may believe they will be immediately let go or have a new boss they despise.
What promises have you made to your team? If you promised to give someone equity “someday,” they may resent it when they learn you are selling your business. If a team member deserves equity, make it happen before the sales process begins.
Author Sunny Vanderbeck advises business owners that people without a stake in the outcome won’t feel any urgency to help you achieve your dreams. In his book, Selling Without Selling Out, he suggests that you “Incentivize the acquisition team to align around the task of selling the company or taking on an investor.”
You can also draw up retention agreements for those who help the transition run smoothly. Although these agreements may affect the final selling price, they can give you more peace of mind that your staff will assist in the process.
In some acquisitions, the people who helped make the sale happen can wind up contributing to the post-sale integration. With the right expertise and attitude, they could even find themselves promoted to new, higher paying positions after the sale.
Just make sure that you show your top insiders that the sale isn’t just about walking away with the biggest check possible for you and your family. They need to trust that you also care about the employees you leave behind.
The process of selling a business is like emotional warfare. It will be far more grueling than you initially expect. You not only must be fully prepared to quickly respond to the demands of your buyers, but you must also know the best way to handle the concerns of your spouse, children, employees, and partners.
Download our FREE guide Code Red:12 Seller Mistakes to learn about some of the biggest hurdles you can expect during the process.
If you are thinking about selling your business, call me: 561-543-2323. I will tell you more about how to prepare yourself mentally and emotionally for an experience that will change your life.