How will employees be impacted if I sell my business? This is an interesting question that not all business owners ask me, but probably should.
When I sold my franchise, I technically didn’t have any employees. My wife worked as the office manager and I had a contract installer, and I did sales and ran the operations (even though my wife and I were employees of the business).
I was worried about my installer when I sold the business because I did account for 65-75% of the work he did on average. Some months he had large projects he worked on for other companies, but mostly he worked for me. I did not know if the buyer would use his own installers or if he would continue to utilize my contractor (it turned out he just used his own installation crew). So I was worried about him finding other work. Luckily for me, it didn’t matter, my installer decided that me selling my business was a perfect excuse to retire.
My wife ran the office for us part time (around 20-25 hours a week). As business grew, we started talking about hiring someone to work another 15-20 hours a weeks, but doing some research, we found that there was technology and services (like an answering service that could book appointments for me) to supplement the time she was not at work and keep our labor costs lower. A new owner had the option to replace Amy with a new office administrator or use other technology/services to replace her. In the case of my sale, the owner already had administrative people in his business to do what she did.
Do not tell your employees you are selling before the business sale closes.
Most successful companies have certain key employees that are vital to the success of the business and the buyer will want them to stay on. I know other Budget Blinds owners that run the business and have multiple salespeople and installers. Some have other office help too. Many of them can be gone and the business runs itself. The business is not dependent on them being there (which is the best kind of business to sell). We always tell our clients, “DO NOT IN ANY TERMS,” tell your employees you are selling. Unless you have one that you know would possibly buy you out. The risk you run of having those employees quit and find new jobs is very real and could hurt or stop the sale of your business. The best time to tell your employees you sold, is after the sale has been completed.
There are times though, that you may want to consider telling them up front. If they are critical to the businesses success (i.e. they are a top performing sales person or a general manager) you may want to talk to them, and tell them that as a condition of selling the business, the new owner wants you to stay on, and the new owner could incentivize them to stay on, or you as the current owner could too. Maybe you create an escrow account with a bonus if they stay on for a certain amount of time after the sale to help ensure the new ownership succeeds.
If you have done a good job of only keeping on productive employees that are good to your customers, they will most likely keep their job once the new ownership takes over. The buyer of your business is buying it because you have a business in place with employees and processes that help you take care of your clients, which in turn makes money and they will not want to jeopardize that.
If you have family that works in the business, will they stay on and work for the new owners? Or will they leave with you? If they do not plan on staying, make sure your broker knows that and tells buyers that they will need to hire someone. If you have a timeline for selling your business, you can plan ahead and hire people to replace your family members and slowly transition the family members out of the business. If you have many family members in the business, that may be hard to do without alarming the other employees. If you can transition them out, a new owner does not have to worry about hiring new people right out of the gate and that is one less task when they take over.
There is no crystal ball out there that can tell you what will happen to your employees. However, if you have treated them well and they are vital to the success of your business, the new buyer will most likely treat them like gold!