A business is only as good as the team running it. When buying a business, your future success or failure could depend on retaining key employees after the acquisition. To maximize your chances of success, it is important to know how to keep talented employees when acquiring a business.

In this article, we discuss how losing key employees can hurt your acquisition as well as eight ways to maintain key employees after buying a business. These include:

• Working with the seller ahead of time
• Understanding employee concerns and priorities
• Giving rewards when appropriate
• Building and maintaining a healthy company culture
• Providing retention agreements
• Communicating your vision
• Seeking employee buy-in
• Proactively addressing conflicts

Related Article: What’s Next for Your Team? Navigating Employee Impact When Selling Your Business

How Losing Key Employees Can Hurt Your Acquisition

As a business grows and becomes more complex, the need to hire employees grows with it. As more and more tasks are delegated to individuals or teams, so, too, the business’s success rests more and more with the team. While the owner may still direct big-picture tasks and fulfill key roles, employees handle the lion’s share of the work.

This evolution can be great for the current and potential future owner (you). Talented employees can continue to manage day-to-day operations and drive future growth while freeing up the owner’s time. The owner, for their part, can take the opportunity to step away from the business or focus on other projects.

As a buyer, however, this arrangement can run into trouble if key employees decide to leave the existing business once you take over ownership.

Decline in current performance

If key employees leave, you could notice an immediate decline in the performance of the business. For example, let’s say you purchased an ecommerce business. The business has a small marketing team, including a paid advertising genius who is responsible for driving a significant portion of your revenue.

If they quit and nobody is available to fill their shoes, you would notice a quick decline in sales and revenue.

Reduced future growth prospects

In addition to short-term decline, you could also face reduced future growth prospects if key employees leave after purchase.

As an example, many businesses rely on individuals or teams to identify and develop new product opportunities. If you lost the part of your team responsible for bringing new products to market, the future growth of your company would be in jeopardy.

Increased owner time requirements

One of the best perks of buying an automated business (i.e., one that has employees) is the ability to step back from operations while still receiving income from the business. This automation allows you to work less and focus on other activities that you love doing.

However, this cushy position will become threatened if key employees decide to leave after you acquire the business. Ultimately, you are the one who will need to step in and pick up the slack left by an exiting employee.

While you can eventually hire and train new employees, this takes significant time and effort. Furthermore, some employees are so crucial to business operations that it can be quite difficult to replace them successfully. Clearly, finding ways to keep key employees on board is crucial to the ongoing success of your business.

8 Ways to Maintain Key Employees after Buying a Business

When a business is sold, key employees may choose to move on before, during, or after the transition for a number of reasons. They could have a strong working relationship with the current owner and resist the change that comes with working for a new owner. Or, they may see the juncture as a natural opportunity to pursue other projects.

As a buyer, the way you handle the acquisition can play a large role in whether key employees decide to stay or leave. By taking proactive steps, you can make it more enticing for employees to stay on board after you have taken over ownership. Below, we review eight things to do to retain key employees.

“Finding ways to keep key employees on board is crucial to the ongoing success of your business.”

1. Work With the Seller ahead of Time

Employee retention starts before the business sale is complete. The first step is to speak with the owner to identify key employees and work together to encourage retention during and after the acquisition. Of course, this is only possible if you develop a trusting, collaborative relationship with the seller from the beginning.

Have the seller communicate the acquisition

Company acquisition can bring a lot of uncertainty for employees—they don’t know what changes are in store or whether they will continue to have a job after the sale is complete.

The first thing to do is to have the seller communicate the acquisition to team members clearly and transparently. When doing so, it is important for them to show that the sale is happening on positive terms. Likewise, they should make it clear that there is unity and collaboration between the both of you.

Communicating in this way helps to instill confidence in employees and makes a potentially disruptive experience a bit less challenging.

Communicate directly with the employees

Once the seller has communicated the sale to the team, it is your turn to communicate directly with them. This is your opportunity to build rapport, paint your vision for the future of the company, and start getting to know who you will be working with. At the same time, ask for input and feedback from the employees; at this stage, they will likely know more about the company than you. Use their wisdom as you transition to your new role.

Be transparent

Be transparent and honest throughout this process. Sugarcoating upcoming changes doesn’t do anybody any favors. It will, however, destroy any trust that you have with your employees. Keep open lines of communication with your employees and set clear expectations. If changes are coming, tell them in advance so they can plan ahead.

By being transparent, your employees will grow to trust you.

2. Understand Employee Concerns and Priorities

As you move into your new ownership position, it is important for you to get to know your employees and understand their concerns and priorities. Have conversations or one one-on-one meetings with key employees and focus on listening to them. Ask about their role in the company as well as perceived issues or challenges.

By listening to your employees and making them feel understood, you show them that you take them seriously, value their opinions, and respect their contributions to the company. This, in turn, increases job satisfaction and makes it more likely they will stay on board. At the same time, you gain valuable insights into how your company works and the challenges you may face.

“By being transparent, your employees will grow to trust you.”

3. Give Rewards when Appropriate

Everybody wants to feel that their efforts and contributions are rewarded fairly. From an owner’s perspective, giving rewards to employees when appropriate is key to retention.

If an employee consistently works hard, performs well, and is an all-around team player, be sure to reward them appropriately. For starters, this includes paying them fairly, either through a salary, freelance income, or performance-based incentives.

In addition to monetary compensation, look for ways to provide your key employees with opportunities for advancement. This could include moving from a content writing role to a content director role or from managing product pages to becoming a product developer. Or, offer training opportunities to develop employee skills and abilities.

Lastly, make sure you show verbal recognition of valuable employee contributions. Tell them you appreciate their work and give public recognition where it is due.

“Building a healthy company culture is crucial if you want to retain employees.”

4. Build and Maintain a Healthy Company Culture

Compensation, recognition, and advancement opportunities are critical for retaining employees. However, you can get all of these right and still lose employees if you have a poor company culture. People want to enjoy where they work. They want to get along with their team and feel comfortable in the work atmosphere.

Building a healthy company culture is crucial if you want to retain employees. While every good company culture may vary slightly, they generally share similar characteristics. Some of these include:

• Trusting coworker relationships
• Strong leadership
• Coworkers who enjoy being around each other
• A sense of purpose or mission
• Employees feel inspired to take initiative
• A sense of fun or lightness while at work
• Healthy communication

Without a good work environment, key employees are likely to leave. As an owner, take the time to build and maintain a healthy company culture in order to keep your best employees around.

5. Provide Retention Agreements

Retention agreements can be used to incentivize key employees to stay employed for a certain period of time. Typically, they offer some form of compensation when the employee meets the terms of the agreement. For example, you could offer to pay an employee an extra $10,000 if they stay on for an additional year after the sale has been completed.

Retention agreements can be a great way to keep employees on board if you feel they are wavering. Of course, you will have to assess whether the extra compensation is worth the benefit of keeping a team member. Keep in mind, however, that finding, hiring, and training a replacement employee can be quite costly. Additionally, some employees are so critical to the success of the business that it makes sense to keep them on board, even if it proves to be costly.

6. Communicate Your Vision

Talented employees generally like to know that their contributions help support a larger goal. As a leader, one of your roles is to clearly communicate your vision for the company and its direction.

Communicating a clear vision helps to instill meaning and purpose into day-to-day tasks. This could include general targets or performance goals, such as sales or revenue numbers. Or, it could be a more general, big-picture vision, such as becoming the top blog for DIY (do-it-yourself) auto repair.

Whatever your vision may be, don’t keep it to yourself. By sharing it with your employees, you can increase their work satisfaction and motivation and improve their odds of staying in your company.

“Talented employees generally like to know that their contributions help support a larger goal.”

7. Seek Employee Buy-In

As a business owner, you want to know that your employees have buy-in for the success and direction of your business. By communicating your vision, you encourage employees to take ownership of their part in the success or failure of the company.

Seeking employee buy-in also requires you to genuinely seek input from team members. Ask them for their opinions and incorporate their suggestions when you feel it is appropriate. This shows that you respect their experience and wisdom and value their contributions.

8. Proactively Address Conflicts

Conflict in the workplace is natural. When two or more people collaborate together to solve a set of problems, personality differences, ideas, and approaches often clash. The result can be productive and drive forward progress. Left to fester, however, workplace conflicts can seriously harm or destroy your company.

To avoid this, be sure to address conflicts before they get out of hand. This starts with creating an environment where employees feel comfortable to address differences directly as they arise. Of course, this requires employees to have the skills to communicate skillfully and seek productive resolutions.

“Left to fester, workplace conflicts can seriously harm or destroy your company.”

If a conflict between employees does progress, you may need to step in to help resolve the matter. In extreme situations, you may find it helpful to bring in an outside mediator to address the issue, deepen understanding, and develop a plan to move forward in a healthier way.

By addressing conflicts proactively, you create a more welcoming and pleasant working environment. This, in turn, makes it more likely that employees will stay on board.