Are you selling your business? If so, you don't want your employees, or your competitors, for that matter, knowing about the sale before it happens. How do you preserve confidentiality?
The first time your employees or vendors should hear about the sale is in the meeting with them the day after the business has closed escrow.
There will need to be site visits so that prospective buyers can visit the business and "see, touch and feel" in order to determine if it is a good fit. These should be organized outside normal hours, when employees are not around. Some companies require confidentiality agreements to be in place before any specific information is given to a prospective buyer.
"When is the best time to inform employees that you are selling your business?" The short answer is that you should wait until the transaction is completed, and there is a good reason for that.
Most business owners understand that much of the value of their company is embodied in their employees. Employees make the company possible, and many owners develop a close relationship with some of their staff. Those relationships sometimes lead business owners to want to disclose the potential sale of their business to one or more of their employees.
"They deserve to know" is a common refrain. Before you take that step, however, there are other things that should be considered, as they can affect the value of your business.
There is an enormous risk in sharing this inside information with employees.
Once it is common knowledge that your company is for sale (and it will become common knowledge once employees know), your company loses value: vendors are less likely to sell to you or increase credit limits; customers are less likely to buy for fear of a lack of continuity of the relationship; and employees are less likely to stay.
Once the cat is out of the bag, if you are able to get it back in at all, the damage is already done, and it can take years to redevelop the relationships that made your company valuable in the first place.
McGrath can be reached at [email protected]
The first time your employees or vendors should hear about the sale is in the meeting with them the day after the business has closed escrow.
There will need to be site visits so that prospective buyers can visit the business and "see, touch and feel" in order to determine if it is a good fit. These should be organized outside normal hours, when employees are not around. Some companies require confidentiality agreements to be in place before any specific information is given to a prospective buyer.
"When is the best time to inform employees that you are selling your business?" The short answer is that you should wait until the transaction is completed, and there is a good reason for that.
Most business owners understand that much of the value of their company is embodied in their employees. Employees make the company possible, and many owners develop a close relationship with some of their staff. Those relationships sometimes lead business owners to want to disclose the potential sale of their business to one or more of their employees.
"They deserve to know" is a common refrain. Before you take that step, however, there are other things that should be considered, as they can affect the value of your business.
There is an enormous risk in sharing this inside information with employees.
Once it is common knowledge that your company is for sale (and it will become common knowledge once employees know), your company loses value: vendors are less likely to sell to you or increase credit limits; customers are less likely to buy for fear of a lack of continuity of the relationship; and employees are less likely to stay.
Once the cat is out of the bag, if you are able to get it back in at all, the damage is already done, and it can take years to redevelop the relationships that made your company valuable in the first place.
McGrath can be reached at [email protected]