After years of hard work on the business and months of effort on the deal, you’re finally steps from the finish line. It is a monumental accomplishment that takes careful planning and a significant investment of time. Perhaps you have enrolled a couple of key managers in the opportunity, but the rest of the team, including staff that have been with you since day one, don’t know that you’re about to sell the company. How and when do you share the news?
Often, a client’s first instinct is to share the news with everyone at the company well ahead of a deal actually being done. Offers come in and the owner says to us “Great, let’s tell everyone that I’m going to do a deal.” The reality of dealing with multiple bidders while keeping an entire company informed of the process is daunting. Once you’ve told a key employee about the transaction, they will expect to be kept informed, which quickly becomes overwhelming even (or especially) when you’re a small business.
Here are 6 tips to managing communications:
- If you chose to inform top management, be sure to mandate that they keep the news confidential. Typically, we recommend having them sign confidentiality agreements. Public companies need to be particularly strict on this.
- The more people you tell, the harder it is to “pivot” to a different buyer or to walk away from the deal. Keep the number of people informed to a minimum.
- Once the deal is closed hold private discussions with your key people, then roll it out to the company.
- Tell employees in person, preferably with the buyer in the room, but wait until the deal is closed (if you’re a privately held company). Coordinate the messaging and communication plan in advance of the meeting.
- Often, employees of closely-held businesses have expected a change for some time, especially when the owners are getting older. Keep in mind that even if they are expecting change, your employees will be concerned about their personal future. Their reactions might be mixed as they start to think through the implications this has on their lives.
- Keep in mind WARN act requirements for notification if you are laying people off or closing a plant.
Hard work, sweat equity, and calculated risk taking are what help owners build businesses worthy of a sale. Successfully selling your business is a complex process and a validation of your accomplishments. Often the deal closing is viewed as the finish line. But the true test of the transaction happens when you have successfully transitioned the business to the next owner. Keep in mind these 6 communication tips to make sure that your sale is a success.
Alan Fullerton is a partner with Mirus Capital Advisors. He works with owners of middle market businesses and can be reached at firstname.lastname@example.org.