When Should You Tell Your Employees About the Sale of Your Company?

You’ve been planning this for months, likely even years. You’ve built a great business that you’re proud of, but it’s time to retire and move on to the next phase of your life. Certainly, this is a very personal decision. But of course, selling your business affects quite a few other people. When is the right time to inform your employees the business will be sold?

Every experienced business broker agrees that you should keep the sale confidential until the deal closes. There are ample reasons that this may benefit everyone. Continue reading to find out why this may be so important to you.

First, it’s possible that the sale won’t happen. A buyer may back out or fail to get financing. There are many reasons a deal might not happen. If you’ve told your staff in advance, you’ll now have to spend time explaining what went wrong. Meanwhile, they may have spent way too much time and energy worrying or speculating about the change in ownership, which takes their focus off the work to be done. If staff is unaware of the sale, professional morale tends to stay high.

The good thing about owning a company is that most of the staff are almost always out in the field. This tends to mean that you don’t have to be concerned about them overhearing confidential conversations, or getting curious about a flurry of unusual activity. You want to make sure they remain productive and that the company keeps making money. That’s one mistake owners sometimes make: taking their foot off the gas once they’ve decided to sell. Buyers will want to know that the company is thriving and profitable, and your employees are essential to that end.

You may also have some team members who will be upset at the idea of any change, even if it’s positive. Long-term employees may have stayed because they enjoyed working for you. It’s understandable that they’d be apprehensive about starting over with a new boss. Some workers may decide to take their chances on the market, worried about keeping their jobs under new management. Retention should be a priority for you, since your workforce is one of the assets your buyer will be purchasing. 

Keeping the sale confidential also allows you to control the messaging. When you do announce the sale, it’s better if you can introduce the new owner and speak positively. Talk about their experience, attributes, and vision for the company. Ideally, you and the new owner will address the staff together. This way you can present a unified front and ease staff into the changes that are happening. 

There is one exception to this rule, and that is if you have a “key employee.” Some contracts stipulate that a key employee (a manager, foreman, or someone with specialized talent) remain in the company for a specified period. Some buyers will want to meet the key employee and make sure they can work together well. If that’s the case, you’ll need to bring that employee in on the news of the sale early, reminding them that confidentiality is absolutely required. This may also be the case if you have family members who work in the company – you’ll have to manage both information and relationships carefully.

Ultimately, the best time to tell employees is just after the deal closes. You’ll have the timeline and plan in place (some deals include the owner staying on for a short transition period.) You can prepare your remarks in advance, making sure you’re in control of your emotions (this proves to be harder than you might think) as you thank your team for their hard work and support over the years. 

Telling your staff about the sale may not be easy, but it helps if you present it as a done deal. You can finally focus on retirement, and they can remain focused on the future and how they can contribute to the company’s ongoing success. 

If you feel that I can help you evaluate your company’s worth and marketability, the first step is to use our schedule a call with me. 

About the author: Jim Parker


Jim Parker is an experienced business broker specializing in small businesses. His company is based in Clermont, Florida. As an industry leader, he has served as the past president of the Business Brokers of Florida and currently sits on the International Business Brokers Association’s Board of Governors. Jim is a sought-after speaker who teaches others in his industry best practices in ethics, closing transactions, and finding qualified buyers. He has earned over 50 awards and recognitions in his career.

Jim is a Certified Business Intermediary (CBI), Certified Mergers and Acquisition Professional (CMAP), Masters Certified Business Intermediary (MCBI), and is a Mergers & Acquisitions Master Intermediary (M&AMI. He is one of less than 20 business intermediaries in the world that have all four of these designations. To contact Jim, give him a call at (407) 927-8999.