How to Break the News to Employees and Customers You’re Selling Your Business
Communication is a key factor when telling your employees and customers about the sale of your business. To them it may come as a shock despite how long you have been planning to make this move. That being said, when telling your employees, vendors and the general public, the timing is key.
When selling your business, it is only customary to tell key employees about the sale of a business. There may be employment contracts with key employees that are contingencies in the deal.
On transactions under one million dollars it is unusual for employees to know about the sale prior to closing. If they do know prior to closing, it would only be after all the contingencies in the purchase contract have been satisfied.
Employees are fearful of losing their jobs and new owner are fearful of employees quitting when a business is sold. The fact is that employees need jobs and the new owners need employees. The fear employees may feel is often unwarranted. Unless the business is purchased by a competitor, where there could be potential for job overlap between the two companies, the majority of all of the employees are typically retained by new ownership.
After the transaction is closed, but before the sale has gone public in a broad way, reassuring your major accounts (customers and vendors) will prevent them from being blindsided in a way that can ruin your relationship as well as their relationship with the new owners. This can be crucial to a successful transition from old owner to new. Again, how and when this is done is critical.
As far as the customers and the general public are concerned, it is more appropriate to let them know of the sale when it is final and the terms of the transition are in place. If they are told prior to this, you may lose the business you could have had in the remaining weeks of ownership. It is important to note that in some instances, the public is never informed. The new owners purchase the business under a new corporation but set up a fictitious name, what’s called a DBA (Doing Business As) to continue doing business under the same name as the previous owners. To the eyes of the public it is business as usual.
Vendors are often informed of new ownership prior to or immediately after the transaction is complete. If done after the transaction, the new owners might be on COD for deliveries or in some instances use the former owners account until the new one is set up.
Being quick to clarify rumors if and when the news gets broken on a broader level shows transparency and confidence in your business dealings allowing for employees, vendors and customer to see how you behave in a business transaction. This also helps to allow your customers and vendors to trust the new owners and make the transition smoothly. Whether or not you have financial interest in the business after the sale this remains an important concept.
Cress V. Diglio, Florida Business Broker
Whether you are looking to buy a business, sell your business or merge with another business, Florida Business Broker Cress V. Diglio has the experience to assist you in all facets of the transaction. Call Cress today for complete transaction support and expertise, 888-984-4208, or visit https://floridacertifiedbusinessbroker.com.