If entrepreneurs have mixed feelings about selling, that’s nothing compared to what the employees go through during a change of ownership. If you are selling, the new buyer expects the knowledge and expertise of your employees to come in the purchase. If you are the buyer, you based the purchase price on a going concern. Losing trained employees costs money.
Are there ways to limit the desertions?
- Put yourself in their shoes. When you’re selling your company, you have a few months to get to know the buyer. Employees don’t have the benefit of all that prep time. Presumably they have put thought into choosing to work for you, because they knew that commitment would likely last a few years. Compare that with what happens during an acquisition. All of a sudden, five minutes after an announcement, they are working for a new owner.
- Steady the ship. If you are the business buyer and want to hang on to those employees that contributed to the growth of the business, don’t change too much too fast. Share the comforting news that people won’t be losing their jobs, and won’t have to pick up their families and move.
- Communicate carefully. Employees will have a lot of questions after the sale or acquisition is announced. You won’t have all the answers – regardless of what side of the negotiations you are on. Employees want to know what the road map looks like. You may not have the whole plan mapped out. Tell the employees as much as you can, but be honest about what you don’t know and keep them informed and involved as much as possible as things develop.
Many businesses lose 10% – 30% of the employees during a transition. If you are the buyer, consider this as you develop your offer price. When the owner has been a key employee and you will not be keeping them on, be certain to value the business accordingly. If you lose additional employees, what is left?
If you are considering buying or selling a business, let’s talk about your plans before the final paperwork is signed! We’ve all seen businesses close shortly after transition to a new owner. I always wonder what caused the quick demise. I’m sure it was not what they had planned……
