What’s Going to Happen to My People When I Sell?
Early mornings. Late nights. Way more than a 40 hour work week. You’ve done it all as you’ve built your business. And you’d do it all again. Clearly, it was a worthy investment when you look at the life your business has provided you. Chances are, a key employee or two has been by your side for much of it.
As you navigate the sale process, like the majority of our clients, your concern will turn to how those vital employees will be cared for in your absence.
Will they be respected by new ownership?
Will they be cared for in the way you’ve cared for them?
Will they simply be fired to save a few bucks?
These people have been with you through thick and thin. Building your company alongside you. But as you prepare to exit, your attention turns to one question again and again.
What’s going to happen to my employees now that I’m selling?
4 Ways You Can Look Out for Your Key Employees During the Sale of Your Company:
Bring your team into the sale process
Buyers are looking at your business as a whole, but won’t always see the people and processes that make it what it is. With that, you should bring your key employees into the sale process, talk about how they bring value to your business, and give them the opportunity to impress a buyer.
Here, their goal can be to receive an employment agreement with the buyer that lasts for a few years upon close.
2. Find a buyer that matches your company values
Over the years, you’ve developed a way you do business that has led to your success. Most often, this means you have defined, although sometimes unspoken values within your company that each employee understands and aims to display in their work. As you go through the process of meeting and selecting a potential buyer, make sure you understand their values and how those line up with your own.
3. Clearly communicate your goals for your team to your advisors
A team of advisors that you trust is vital to a successful outcome. With that, they should be focused on the outcome that you desire, not what’s best for them. Make sure that you clearly state what your goals are for key management at your company. While no advisor can promise to get you everything in a negotiation, they’ll be able to proactively look out for your interests and your people in the process.
4. Be part of the future ownership
Selling your company doesn’t have to mean selling 100%; in fact it often doesn't nowadays. If you pursue a majority recapitalization where you sell a controlling ownership stake in the business, but still maintain a meaningful percentage of the stock and a seat on the board of directors, you will be able to better smooth the transition for your key people. This option can provide you with the ability to mostly exit your company, while retaining enough influence to direct some important decisions.
At the end of the day, you want the people that have served your company well to be left in good hands for their remaining years with the company you built together. Ultimately, there’s no 100% sure fire way to do that, but the ideas we’ve laid out can certainly help set you up for a successful exit on your terms.
If this keeps you up at night, and you’d like some advice on the process, feel free to reach out, we’re here to help you feel confident and informed of all your options!
