Confidentiality is a key component of any business sale. You don’t want your competitors, your vendors, your employees, or any other stakeholders learning about your intention to sell the business until it’s a done deal.
Without confidentiality during the sales process, trust in your business might begin to erode as rumours swirl about its pending sale. That can dramatically impact its eventual sale price.
Of course, your employees will need to learn about the sale of your business eventually—if a new boss just shows up out of the blue one day, they’ll be suspicious. When, after that, they check your social media to see you on an island in the Caribbean sipping a mai tai, they’re going to know something’s up. They probably won’t be very happy about it, either.
In this article, we’re going to teach you how to balance confidentiality with employee notifications—and how a business broker can help you along the way. Let’s dive in:
Talking to key employees
Telling all of your employees that you plan on selling your business is almost always a bad idea—rumours can swirl, employees might quit, and things can fall apart quickly.
Telling a few of your employees about your plans? That can be a good idea.
First, determine which employees need to know about the sale of the business. These employees are often called “key employees”. Generally, these are senior/executive employees who make decisions for the business—be they purchasing decisions, accounting decisions, or otherwise.
These employees may be integral to the ongoing success of the business once it’s changed hands—indeed, some employees are so vital to a business that buyers will require them to stay on as part of an agreement.
You’ll want to talk to them before you sell—doing so can both reassure them that they’re an invaluable part of the business and secure their agreement to continue working for some time after the business is sold. When talking to them, it’s a good idea to get them to agree to sign an NDA so that news of the sale doesn’t leak.
Confidentiality when selling the business
Rumours of a sale can work their way back to your employees—and that can lead to discontent. A good business broker will mitigate this risk by advertising the sale of your business anonymously. This might involve describing the business—but not its location—or talking about the location but not the day-to-day business activities.
The name of the business is never mentioned until an NDA is signed. A great business broker will also vet buyers who are truly interested (and well-financed), turning away individuals who seem like they’re only interested in getting information.
At our brokerage, we ensure that all ads are approved by the seller before we list them—this adds an extra layer of protection to ensure that no third parties find out about the sale of your business until it’s time.
Informing employees once the business is sold
Once the deal has gone through, we recommend letting your employees know at the earliest opportunity. Other sorts of rumours tend to pop up once a sale is announced, like—“What will the new boss be like?” Discussions can range from the mundane (“I heard she’s a bit of a bore”) to the extreme (“I heard they’re going to cut all our jobs and automate the whole business!”).
Our advice? Get them to meet the new boss the same day you announce the sale of the business—within the hour if possible.
Cool, calm, and confidential
By picking the perfect time to let your employees know about the sale and keeping the process confidential until then, you can help ensure a smooth transition between owners. And if you’re looking for a business broker in Greater Vancouver to help you do just that, we can help. Get in touch with us today.