When to Tell Employees and Customers About a Business Sale
Selling a business is a major decision that takes a lot of thought and pre-planning. You must prepare for the sale well in advance to ensure that you have all your ducks in a row. One of the major issues that inevitably arises when you prepare to sell a business is what to disclose and when. A business broker can provide valuable advice. Prospective buyers need to be screened, qualified, and asked to sign a non-disclosure agreement. Other groups that you must be careful with when it comes to disclosures are your employees and customer/clients.
Those with a vested interest in your business will eventually need to be told about the sale. However, the timing of the disclosure is a delicate balancing act between honesty and confidentiality.
Before the Sale: When you are in the stage of just “thinking” about selling, it is important to keep it as quiet as possible. Since you have not made a final decision yet to move forward, there is no reason to tell anyone who works for you or whom you do business with. If word gets out at this point, it can threaten the stability of the operation, causing employees and clients to start looking at other options.
While you are considering and preparing for a sale, the only people you should share your thoughts with are close family members and friends that you trust not to tell anyone. At this stage, you may also want to have a confidential discussion with a reputable business broker. A business intermediary can advise you on how to approach the sale, what to expect, how to market to prospective buyers confidentially, and the projected timeframe from start to finish.
The Early Stages of the Sale: During the initial phase of the sales process, you still want to keep things mostly quiet. However, depending on the type of business you have, you may need the help of some key employees to help you get organized and make it easy for qualified prospects to perform their due diligence.
Only share information about your sale to associates who need to know (such as those in the accounting department). And again, ensure that these are people you can trust to keep the information confidential. You might also choose to speak about this with trustworthy associates who may also be prospective buyers. Whoever you decide to share the information with, make sure they are willing to sign a non-disclosure agreement, so the news does not leak out to the rest of your employees.
The Later Stages of the Sale: After you have reached an agreement to sell the business to a qualified buyer, it is time to let the rest of your employees know. At this stage, there is no longer a need to keep things confidential. By being transparent with your staff, you can help prepare them for the coming change. Be open to answering their questions and let them know what to expect when you hand over the reigns to the new owner. This is also the time to let important clients know about the change. Stay positive and upbeat with them. Tell them why you are selling and show them why continuing to do business with your company will be beneficial for them.