How to tell your staff you’ve sold up

How to tell your staff you've sold up

Article

How to tell your staff you’ve sold up

Dave Rebbettes
January 2019

The deal is done and you're about to sell your business – now it's time to tell both your customers and your staff. Who do you dread telling the most?

Perhaps surprisingly, the conversation with staff is usually far more stressful for departing owners than letting your customers know. Customers can often see the commercial advantages – but your team may react emotionally. 

Some of your team may already be suspicious after fielding your requests for historic financial data, old contracts and the like. You may even feel guilty for having kept such a big secret from them for months on end.

Former BCMS client Tyson Johnson recalls after selling his Florida insurance brokerage to Arthur J Gallagher: "They depended on me, and I didn't want them to feel threatened or insecure. 

"People know that selling a company doesn't always end up good for everyone in the team. It was emotional and perhaps the hardest part [of doing a deal]. But it didn't take long to convince them that we were carrying on as before, everyone's job was safe, and we now had more ammunition."
 

"It was emotional and perhaps the hardest part [of doing a deal]."

Marketing agency owner Genevieve Rockett experienced a similar positive reaction after announcing the sale of Rockett Interactive to sector heavyweight Dentsu Aegis

"We didn't know exactly how the team would react," she told us. "It took a while for the news to sink in, but with time our team embraced the opportunities and are enjoying the advantages that come with being part of a much larger entity."

Announcing the sale of your company also acts to clarify the situation, especially if some employees know there's something going on. As Darren Cairns found out upon selling industrial software firm Intrinsys to a Swedish acquirer.

"When I made the announcement, the new owners flew over and we had an Announcement Day," he says, "People knew something was coming up and the perception was that we were going to announce that we had acquired a business, [as we had] three years earlier. Some people thought this was the same thing – they saw certain signs that they recognised. 

"So, I don't think anyone got the news that they were expecting, and there was a bit of an intake of breath when the announcement was made."

While it's the acquirers job to lead on communications, a vendor with an earnout needs to keep the team motivated throughout integration and the management handover. The goal then is not just to tell your team the big news but to sell it to them. Here's how.

Call a face-to-face meeting

With your acquirer, gather all your staff together if possible to break the news. You don't want some staff finding out second-hand from colleagues, and you need to look them in the eye to explain your reasoning. 

Sell the benefits

Focus on the three main benefits for employees – job security, career development, and re-energising the business. Coordinate with your acquirer to make sure the opportunities are clear. Yes, things may be a little uncertain in the short term, so focus on the opportunities for promotion and the exciting future under new ownership. 

Be honest

You will be expected to have answers for difficult questions, so prepare for them with your acquirer (see checklist below). Explain any potential changes in roles, new contracts or benefits, and outline the workplace culture and employee benefits of the new parent company.  

Share the wealth

Giving staff a small share of the proceeds to thank them is a sure-fire way to help with staff buy-in. This isn't for everyone though, and if you aren't able to offer everyone a bonus, consider a party or celebration to acknowledge their contribution to your success. 

Warning signs

Once you have broken the news, keep a close eye for any potential flashpoints. Watch for greater workload stress, new power struggles, and a ‘them and us' culture clash. If you the pace of change is too fast, stand up for your people and raise these issues with your acquirer.  

"The finance team and call handlers were initially upset but they mostly went on to work for the new business, some with better pay."

Based on our intimate knowledge of more than 600 BCMS-led business sales in the last decade, we know that SME acquisitions are almost always beneficial to employees. Your business will change, but what happens after you have left is beyond your control. 

Finally, it's worth bearing in mind that you won't please everyone even if it is all good news.

When Neil Needham sold Auto Windshields to the AA, he said: "We got all the staff together to tell them. Some thought it was great, but some thought it wasn't so good. But 12 months on a lot of those staff were still with the business. The finance team and call handlers were initially upset but they mostly went on to work for the new business, some with better pay."