We previously discussed the importance of discretion when selling a manufacturing business (or any business), but there comes a point when you are obligated to disclose the sale of your business to your employees. The worst thing you can do as a business owner, of course, is to have your employees, management and customers completely blindsided by an impending sale. When it comes to disclosing something as sensitive as the sale of a business, timing is everything. The more you have your ducks in a row during the selling process — assuming that you’re also keeping up with the day-to-day management of the company in the process — the easier it will be to disclose the sale when the time comes.
Early in the Process, Discretion is Still Important
If you’re still contemplating selling your business, even if you haven’t formally begun the process, there’s very little to gain from showing your hand early. If anything, telling management, employees and customers that you’re selling the business too soon could easily create uncertainty, compromising your relationships and potentially damaging the business in the process. Uncertain customers could find another partner instead, employees could look to jump ship and management might do the same. You will obviously want to tell the people that need to know if they’re directly involved, but be mindful of how and when you disclose information.
Tell Your Managers First Once a Sale Seems Imminent
Once you’re almost certain you will be selling, starting with management is the best approach. They can help in the process and will likely want to participate so the business is transferred to good hands, which could potentially be the management itself. At this point, you will want to address any necessary changes in management or adjustments to your team as you prepare to go to market. Your managers can be a valuable resource and will be one of the largest points of leverage when you’re discussing a sale with a private equity firm or a strategic buyer.
Tell Employees, But Be Prepared for Pushback
You will want to tell employees only once you’ve reached what you’ve deemed as the point of no return. You will not want to tell employees that you’re selling your business only to have it fall through, or extend for months, leaving them in a state of limbo throughout the process. Your employees might also have strong opinions about you selling the business or to whom you would be selling it, and you will need to prepare yourself for some harsh criticism from employees that feel strongly about the move. You will also want to announce that you’re selling your business at first, but save pricing information for last. The amount of information you disclose and when you tell your customers/employees will vary from company to company. It’s better to lean on the conservative side and only disclose as a deal nears its conclusion.
Your Personal Involvement in the Transition Adds Value
One of the easiest ways to overcome trepidation is for the seller to remain involved and close during the transition. It also speaks to the necessity for the seller to adequately vet the buyer to help “sell” your team on the transition. Buyers will differ on the requirements for the seller to remain with the business, but certainly every buyer wants to minimize cultural disruption, and often the seller is the best person to help. Be mindful of using your time as part of the negotiation as well. Transitions can be challenging and any seller willing to help is also creating value for the buyer.