Often the owner of a business will be conflicted by whether they should involve the employees in the potential sale of their business.
People, in general, resist change especially when it concerns their livelihood.
The pros and cons to making your staff aware of your intentions will depend on the business and relationships you have within.
Often the owner of a business will be conflicted by whether they should involve the employees in the potential sale of their business.
People, in general, resist change especially when it concerns their livelihood.
The pros and cons to making your staff aware of your intentions will depend on the business and relationships you have within.
Pros of being upfront – They will respect you more if you’re honest with them. They’ll appreciate the fact that you’ve shared your intentions. It maintains the trusting relationship moving forward. The Buyer will also have confidence the staff know about the change and are less likely to leave. The buyer will also have the opportunity to negotiate new employment contracts, potentially with better incentives and security of employment. This will increase the confidence for the buyer that staff are keen to stay on.
The inspections and due diligence processes will be more streamlined if the employees are aware of the sale. Visiting a premise when its running like clockwork and getting familiar with each person’s role will be a massive benefit to a new buyer. This will also build confidence with the employees that the transition will be open and transparent.
Cons of being upfront – Knowing ownership may be changing may create uncertainty in the workforce. This could potentially cost you time and money in hiring, re-training and may affect a sale.
Employees may also take the opportunity to be less conscientious or loyal knowing you are trying to sell. Work satisfaction and pride in their efforts may also deteriorate. Confidentiality may also become an issue with employees in terms of disclosure of sensitive information.
In general, being upfront is ideal. The risk of staff finding out by another source may irreparably damage relationships. A good way forward is to keep the employees in the loop, ensuring trust is well established and long term. They may feel threatened by the forthcoming changes and for the sake of a smooth transition of ownership it’s your job to keep them feeling confident about their job security.
It's normal for a buyers to be concerned about employees leaving the business at such a critical time. Conversely the employees share the same insecurity about losing their job. Incidence of these situations are very few and far between.