Business Brokers NJ: Article About Telling Employees About Business Sale
It is common for business owners to feel a sense of loyalty to their employees, especially employees that have provided years of service. Because of this loyalty, some business owners make the mistake of telling employees that the business is for sale. Why is it a mistake? It's a mistake because employees panic, and you risk jeopardizing your business before the listing has even gotten into the market. You could have employees disclosing to customers or sales reps or vendors which is not a good idea. Employees also talk to each other so it could spread throughout the entire company. And most importantly, if an employees thinks their job may be in jeopardy, they will look for another leaving you without possibly an essential employee. Many sellers who tell their employees early in the sales process regret it later. Since a business can take some time to sell, you want to time the disclosure of the business sale just right so that you don't have employees on edge for months. Your business brokers NJ have worked with business owners in similar situations before and is ready to provide you with advice about handling this delicate business and personal decision.
There are exceptions to the wait and tell policy. If you run a family business, it's obvious that you'll want to tell employees who are also family. Not disclosing this information until after the sale can cause family strife and problems that could have been avoided. It may also be okay to tell key employees in certain situations. As with anything, timing is important.
Have a question regarding business sales or business acquisitions? Please ask the business brokers from Selby Associates of Cherry Hill NJ today.
Telling family right away is probably best, but you could wait a few months to see how things go before telling key employees about the sale. In most cases, if an employee doesn't need to know, then you should wait until closing or near closing to disclose. At least until after due diligence is complete and signed off and contracts are agreed upon. A business broker can advise you the timing of telling employees before a sale has closed.
One way that employees can find out about a sale is when a prospective buyer walks in during business hours and announces that he's there to view the business. When scheduling walk through, make sure your broker knows to schedule them after-hours or discreetly. For example, you may have the broker inform the buyer that due to confidentiality issues you will be informing employees that the buyer is a sales representative, a potential client, someone from an equipment leasing company or bank rather than an interested buyer.
Once the deal has closed you can hold a post-closing meeting and introduce the new owner to the employees. Most owners have concern about the future of their employees and this can be discussed with the new owner. While a seller has no control over decisions a buyer will make in the future, if essential employees are valued and the buyer is made aware of these essential employees, it is likely that their jobs will be secure. If you're still unsure about telling your employees, discuss it with your business broker.