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

Successfully selling your business requires detailed planning and forethought. After all, your company isn’t just a collection of assets; it’s a whole community of people who’ve helped it grow and thrive. Whether you’re in the early stages of contemplating an exit or actively entering the negotiation phase, it’s important to understand employee impact when selling your business to ensure a smooth and healthy transition.

In this article, we explore potential implications for your valued team members and offer insights on how to navigate these uncharted waters. Read on to learn more about:

• What happens to employees and contractors after selling your business
• When to tell your employees about selling the business
• Three key strategies to help your team prepare for a change in ownership

Related Article: Avoid These Six Common Mistakes When Selling Your Business

What will happen to your team after you sell?

When you sell your business, the fate of your employees can vary depending on several factors. The terms of the sale, the acquiring company, whether you own a large or small business, and the nature of your industry all play a role. Here are some different possibilities that could happen to your team after you make your exit:

• Retention by the acquiring company 
• Layoffs or redundancies 
• Opportunities for roles within different or new departments
• Severance packages
• Consultancy or transition roles 

A new owner could retain your team 

The acquiring owner might choose to retain existing employees as part of the transition process. Maybe your key employees are subject matter experts in their field and the new owner values their knowledge and experience. Or, maybe you’re selling the business as a turn-key business opportunity and a stable workforce is part of the purchase package. 

In this situation, the business structure and the management team might look different with a new owner. But job stability is something you can communicate to your staff and ease anxiety around the transition. The new owner could offer your team employment contracts within the new company to make their retention official. 

Their roles could be redundant in the new company 

In some cases,  prospective buyers might already have an established workforce. Or, if they want to restructure operations after the purchase, this could lead to layoffs or redundancies. Some of your existing staff may stay, but others could lose their jobs as the new owner streamlines operations.

If you know that members of your team will not have jobs after the transition, find a suitable and private setting to have a conversation with them. Express your gratitude for their contributions to the business they’ve helped you build. Then, clearly and honestly explain the reasons behind the redundancy and the impact it will have on their position. 

Conversations with your team about job loss require sensitivity, listening skills, and compassion. Hearing that their job will not exist after the sale is complete is never easy to hear. But if you provide support and assistance, it can help ease the process and maintain a good relationship with your team. 

They might find opportunities within the new company 

Depending on the size and structure of the acquiring company, some of your team members may take new positions and continue employment. They might have a chance to apply their skills and experience in different roles or departments.

For example, your digital marketing specialist might find a new opportunity as a social media manager or content strategist within the new company. Possibilities can vary depending on the new company’s needs, industry focus, and career progression opportunities for new employees. 

New business owners might offer your team severance packages

If the new owner decides that employee layoffs are a necessary part of the transition phase, they might provide severance packages to support members of your team. Severance packages are usually designed to alleviate the financial and emotional impact of job loss. 

Again, communicating to your team is paramount in this situation. Share with them what is included in the severance package and find answers to questions they might have about healthcare coverage, employee benefits, job placement assistance, and calculating severance pay. 

Your team might be asked to stay on through the transition phase as consultants

The new employer might ask your employees to stay on for a specific period in consultancy or transition roles. This allows for knowledge transfer and ensures a smooth transition for the business. 

The temporary nature of a consulting role could cause anxiety for your team—they might be wondering what will happen to their roles after the transition period is over. Be available to answer questions and provide support for your employees. Actively work to negotiate fair and comprehensive consultancy agreements and communicate the specifics of those agreements as soon as they become final. 

Even though your role as the owner of this specific business is coming to a close, continue to commit to the well-being of your team. Whether it’s securing new opportunities for them within the acquiring company or offering resources for professional development during the transition, explore all possible avenues to support the people who helped your business grow over the years. 

Employee impact when selling your business: When do you share the news with your employees? 

Deciding when to tell your team about the potential sales business is a bit of a juggling act. You might want to maintain total confidentiality to prevent the news from disrupting your team’s workflow. However,  you don’t want to keep key employees in the dark and risk damaging company morale or losing valuable staff members. That would certainly lead to a negative employee impact when selling your business.

Each business sale is unique, and you know your team best. It’s important to adept these guidelines to suit your specific business circumstances, team structure, and personalities and needs of your team members. When sharing the news that you’re selling the business, here are some other factors to consider: 

• Timing
• Transparency
• Preparation
• Mode of communication
• Support

Time the conversation well 

It’s important to announce the news of the sale of your business at an appropriate time. Ideally, you’ll have a conversation with your employees after the deal closes or is in its advanced stages. At that point, you’ll have concrete information to share with them and avoid uncertainty when they approach with questions or clarification.

Be transparent 

Be honest with your employees about your decision to sell your business. Avoid surprises or rumors by ensuring that your team hears about the sale directly from you. When you set the standard for open and honest communication, you foster trust and reduce workplace anxiety for employees and contractors. 

Take the time to prepare 

Before you share the news about the sale, make sure you have a clear understanding of the details of the sale and how they will impact your team. Prepare to answer potential questions and concerns that your employees have.

 Spend time thinking about the announcement from their perspective. What would you want to know if you were in their position? Then, research answers to questions you think they might have. Don’t know the answers to their questions? Find out from the new owner and communicate their answers back to your team. 

Choose appropriate ways to communicate

One aspect of communicating the news with your team is considering the best setting for conversation. Consider the size of your company. Maybe an all-staff meeting is the best way to approach your team. Or, you could consider developmental meetings or individual conversations. Choose a setting that allows for two-way communication and ensures that employees have time and freedom to ask questions.

Offer reassurance and support 

During (and after!) the announcement, provide support and reassurance to your employees. Emphasize that their contributions, skills, and the time they’ve invested in your business are valued. Be prepared to offer support and address concerns as you navigate the selling process together as a team.

Employee impact when selling your business: Three ways to help your team get ready for new ownership

When it comes to selling your business, the impact on your team can be significant. As a business owner, it is your responsibility to ensure that your team is well-prepared and supported during this season of transition. 

In order to create a smooth and successful changeover, it’s crucial to address concerns and fears head-on. By effectively communicating about the sale, calming worries, and providing reassurance, you can help your team navigate the change with confidence—all while maintaining their trust and engagement.

Let’s explore three key strategies to prepare your team for the upcoming changes in ownership:

• Communicating the news of the upcoming sale effectively 
• Addressing employee concerns and fears
• Assuring job security and outlining transition plans 

1. Communicate clearly and effectively

One of the most important factors in preparing your team for a change in ownership is effective and clear communication. News of a business sale can be unsettling for your team. They might be anxious and uncertain about their future with the company. It’s crucial to provide them with clear and timely information regarding how the sale is going, how the sale impacts them, and an expected timeline.

There are multiple ways to communicate with your team. You might kick off the conversation by scheduling an all-staff meeting to discuss the sale openly with the whole team. Or, if you’re a small company with just a few employees, individual meetings with each employee or contractor might be a better fit for your business.

During these first conversations, be transparent about the reasons you’re selling the business. Emphasize the positive outcomes and opportunities that new ownership can bring. You can calm your teams’ nerves by sharing the vision of the new ownership and explaining how it aligns with your company’s values and goals.

Honesty and clarity builds trust with your employees. It also minimizes speculation among your team and stops rumors before they start. 

2. Ease worries and resolve uncertainties 

During a season of change, your team naturally has concerns and questions about their roles, job security, and overall impact of the sale on their own professional lives. That’s why it’s important to create a safe and supportive business environment where your employees feel encouraged to express their concerns openly.

Be prepared to answer questions with patience, empathy, and honesty. Your employees need to know that you recognize and value their skills, contributions, and expertise. Sometimes fear of unknown changes can be scarier than the actual transition itself. When possible, explain any potential job transitions or restructuring plans. 

You can alleviate some of the anxiety and help your team prepare for what lies ahead when you’re upfront about the changes that may occur under new ownership. 

3. Outline transition plans 

It’s important to provide your employees with reassurance and clarity. In meetings and conversations, emphasize that the new ownership is invested in the success of the business and well-being of employees. 

Outline any transition plans or timelines that are currently in place. If it’s possible, communicate how the sale will impact specific departments, roles, and jobs within your business. Provide information, support, and resources to assist your team through this transition period.

Some of your employees might be worried about job losses. And depending on the plans of a potential buyer, it’s possible that there will be job cuts after you make your exit. If this is the case with the new owner, provide impacted employees with organized training or upskilling programs to help them adapt to potential changes and new roles or responsibilities. By investing in your teams’ professional development, you’re communicating that you’re committed to their growth and success.

Conclusion 

Selling your business is a significant milestone that can have a profound impact on your team. While the transaction marks the end of one season for your business, it also opens up a range of new opportunities (and challenges!) for your employees.

 As a responsible leader, it’s important to consider the well-being of your team long after you sign on the dotted line and officially make your exit. Communication, honesty, and support are always important aspects of a company culture, but they become even more critical during the sales process.

 By focusing on open conversations, providing reassurance, and addressing concerns, you can help your team navigate the changes and create stability even in the middle of a big change. When you invest in your team’s development and maintain a positive company culture, you can set the foundation for your team’s continued growth all while contributing to the long-term success of your former business.

 Selling your business doesn’t have to be the end—it can be a new chapter for both you and your team.