Deciding to sell a business doesn’t only affect one person, it also impacts your staff as well. But how do you keep your employees happy as you make your exit from the business?
Deciding to sell a business doesn’t only affect one person, it also impacts your staff as well. Mike Robson, director of Azure Partners, explains how to keep your employees happy as you make your exit from the business.
When first announced, the sale of any business will inevitably create a level of concern with staff. The fear of the unknown is very potent, especially when combined with today’s uncertain economic environment. This means that you have a potentially very destabilising issue on your hands that will need to be dealt with quickly and effectively to avoid undermining the morale around the exit event.
In our experience, the one overriding principle in managing this process is that it is essential that you don’t let people find out for themselves. This will provide the single greatest opportunity for misinformation, mistrust and conspiracy.
You must therefore ensure that you are in control of the information and that you are actively managing your potential buyers, who could unwittingly be the most likely source of an information leak through indiscretion or exuberance around doing the deal.
When you are ready to share this information, then the first step to addressing any staff concerns is to position the change from the acquirer’s perspective. This will always have a positive angle; otherwise they wouldn’t be doing it. There are plenty of positive messages that can be promoted; from being part of a new and faster growing company to opportunities for personal development and promotion.
The timings as to when you should share this information will vary primarily according to what type of sale process you are involved with. We would categorise the four predominant types of sale as follows: fire sale, financial sale, strategic sale, and management buy-out (MBO).
In the case of a fire sale, where the business is being sold under financial duress, it will probably be necessary to try and keep the situation under wraps until a buyer is in position. While the business’s plight is unlikely to come as a complete surprise to your management team as cash flow problems are likely to have led to issues with creditors, we would still advise that you have the new buyer in place before sharing any news.
Take your management team into your confidence then, explaining that maximising the chances of continued trading, and thereby employment, depends on keeping the company afloat as a going concern. This state of affairs may call for unavoidable management action, which again must be communicated to the wider workforce with both sensitivity and a sense of realism.
In the case of a financial sale, where the purchaser is looking at the business as a profitable concern capable of development with further investment, staff should understand that the change of ownership should be seen as an opportunity not a threat. Here the staff should be informed as early as possible to enable a fast and efficient transfer.
This too will be the case with a strategic sale, where the purchaser has recognised that integrating the business can achieve major added value benefits due to the synergies that will be created. In general this type of sale should provide significant opportunities for at least some of the staff.
Lastly, with an MBO, the players will be known by the staff who will probably perceive the change as relatively minor, so a smooth transition can be realistically expected. Depending on the size of your organisation, either address the staff together or bring the managers together and announce the acquisition.
We also recommend that you provide a hard copy version of the announcement, and a comprehensive set of answers to all the likely questions that will be raised.
The announcement and these questions and answers should be available on-line internally for staff to refer to. This will help avoid Chinese whispers. You should also let them know what will happen next and the time scales.
Fix a set length of time for the meeting while offering easy access to a high-level contact that will be available for individuals to ask further questions after the meeting. Be positive but not unrealistically optimistic if you know that restructuring and redundancies are likely, and provide frequent information updates.
Finally, work with the purchaser to produce a list of the media who are likely to be interested in the acquisition and together develop press releases that focus on the positive aspects so as to pre-empt publication of misinformed articles.
If you take these steps, then you should be able to effect a smooth transition which enables your staff to move forwards into a new and positive future, while allowing you to enjoy a trouble-free exit.