In our view, the most critical element of transitioning any business to a new owner once it is sold is the staff.
They are the absolute key to the success of the transition, and many businesses can not operate smoothly without happy and productive team members.
So many business owners and buyers deal with this the wrong way.
They either make too much of a song and dance about the sale. Or they don’t do enough to address any of their staff's concerns.
Either way, it is a recipe for swift demise.
We can tell you from our experience transitioning literally hundreds of businesses, that this can be a very exciting time for all employees. If done properly, it can be re-invigorating and birth new life into the team.
In true form – we have some rules to follow that work every time.
DON'TS:
1. Never tell the staff the business is for sale, until after contracts are exchanged and conditions precedent is met.
I.E. The sale is 100% binding. This stops the staff living in uncertainty and the unknown of who the new owner is, and if their working conditions, pay, or culture will change. This level of uncertainty can cause staff to start looking for other work. The worst thing that can happen during a sales process is staff leaving, this reflects poorly on the business.
2. Do not inform staff the business is being sold by email or text.
No matter how large your organisation, make the time to address all staff appropriately and in-person – preferably everyone at once or in groups. You do not want the staff feeling like they are just a number.
3. Do not let the Purchaser communicate with the staff or attend the business during their training and handover period without first informing the staff.
Being respectful to their needs and possible concerns shows great leadership, which also validates your choice to sell the business to the new owner.
DO’s
1. Arrange a specific meeting, preferably after hours to address the staff, and formally tell them the business is for sale.
Prepare what you will say in advance and rehearse it a couple of times, so you don’t stumble and appear uncertain. This is a big moment, and the staff will feel your excitement
2. Speak highly of the new owner, tell the staff about the owner’s commercial background and why you think they are a great fit, and successor to the business.
In most cases, the buyer can bring new value to the business, and this is a win for everyone.
3. ALWAYS assure the staff that their employment conditions, hours, pay, and roles will remain the same. Nothing will change and they have nothing to worry about.
It is also ok to ask the staff to be supportive of the new owner and patient while they are finding their feet in the business. This set’s up the expectation that everyone is human and deserves to be treated that way.
4. Invite the staff to ask any questions to you or the new owner, no matter how trivial. When the staff feels like they have a voice, they will be loyal.
Invite the new owner to then speak to the staff either as a group or individually. This shows consideration and thoughtfulness.
5. Finally, and our absolute favorite method is to arrange an after-hours work event which celebrates both the sale and the staff.
Whether it is a sit-down dinner for small businesses or a larger function with nibbles and drinks for larger businesses. Both the new owner and the old owner attend, with all the staff. This is incredibly powerful and symbolizes the smooth transition.
When selling or buying any business, the more you plan towards keeping the staff happy, the better the business outcome will be for everyone.
Good luck!
Daniel Kogan
(m) 0401 620 918
(t) (02) 8923 2632
Dan Levitus
(m) 0450 326 146
(t) (02) 8923 2632