To tell or not to tell. It's a decision every business seller must face when it's time to put the company on the market.
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But sometimes, knowing what to say – and what not to say – can make all the difference.
Owners and experts disagree about the wisdom of informing staff that the company is on the selling block. Some believe that honesty is always the best policy, while others feel that knowledge of an impending sale can have a detrimental effect on both employees and the sale itself.
When employees hear that the business may be sold, they often go into panic mode and scramble for the exits. The ones who stay become less productive and the company's earnings begin to tank. In a worst case scenario, financial losses and exploitation by competitors can even make the business unsalable.
If You Decide to Inform Your Employees . . .
If you make the decision to tell your employees about your plans to sell the company, it's important to give them the information they need to feel secure, but not so much information that it overwhelms them. Start by explaining your reasons for selling the business and the general outcomes you hope to achieve through the sale.
Your employees' anxieties and fears primarily revolve around the possibility of losing their jobs or working for a different owner. If you will only sell the company to a buyer who plans to retain the current staff, that would go a long way toward easing their fears. If not, tell them that although the new owner will make his own staff decisions, successful performance during the sale period will be an incentive for the new owner to retain current employees.
Employees should also understand that it can take a long time to sell a business and not to expect daily, weekly, or even monthly updates. Instead, tell them you will inform them when you have reached a deal with a buyer and encourage them to ignore many of the rumors that will likely circulate in the interim. In the meantime, your door is always open if they have questions – but even in private conversations, you should avoid giving them a blow-by-blow account of your progress.
If You Decide Not to Inform Your Employees . . .
If you decide not to tell your employees that the business is being sold, you don't have to tell them anything – unless someone finds out on their own. Should that occur, you have two choices. You can either deny everything (probably not a good idea) or tell them the truth, but explain your reasons for keeping the knowledge of the sale confidential. If the individual understands that the welfare of your employees was the reason you didn't tell them about the sale, they will be more likely to become an ally and keep the information to themselves.
At some point, you are going to have to tell your employees whether you like it or not. many times, sellers inform their staff after a deal has been reached or immediately after closing. There sale should include provisions for a smooth transition including meet & greet events and information sessions where both you and the new owner are present.