When and how do you tell employees that you sold the business?
I've yet to speak with a business owner who hasn't struggled with this central issue.
Often, the sweetest of liquidity events have a sour ending when breaking the news.
Who am I, and how do I know?
I was the kid who started his business right out of school with no money, experience, or team. I failed forward all day, every day. It was my grit and passion that kept me in the game long enough to experience success.
Success brought an unsolicited 7-figure offer. My gut instinct told me something wasn't right. I said "no" to the 7-figure offer and "yes" to mastering the art of the sale.
Two years later, I said "yes" to a 9-figure offer.
I created a 9-step road map of preparation that gave me the certainty to capture maximum value. Today, I pay-it-forward and help business owners prepare through a 90-day system.
In case you're wondering, know that I also struggled with how to tell the employees that I sold the business. As with so many business owners, I look back and would change things up.
When it comes time to tell employees you sold the business, five key strategies help you win the day.
What are these strategies, and how can you leverage them?
Life doesn't move in straight lines, and neither does a good conversation - Margaret J. Wheatley
Timing is everything when you tell employees you sold the business.
When deciding when to tell employees you sold the business, keep two things in mind.
First, depending on the source, up to 90% of businesses do not have a successful liquidity event.
Second, you need your existing employees to stick around after the liquidity event. Your future buyer is looking to your employees to keep your business moving forward. You may also have financial motivations for continuity in performance.
Read "5 Costly Liquidity Event Mistakes That Will Make You Cry"
Business is business. You need and want your existing employees to meet and exceed key deliverables.
Most people don't like change. With change comes the uncertainty of the unknown. Depending on the person, uncertainty creates fear and even panic.
When a business's fate is uncertain, you welcome a perfect storm of fear, gossip, and rash actions. The last thing any business owner wants is a mass exodus of employees quitting.
Industry rumors arise with competitors and customers. Your business is now like a lame duck and is vulnerable and defenseless.
Competitors happily steal your clients and employees. Irreparable damage happens to your bottom line and the future of your business.
The above scenario is a classic case of good intentions turned bad.
You are now at a fork in the road. Most business owners want to have a clear conscience and tell the employees you plan to sell the business.
When do you tell employees you sold the business?
In both business and life, timing is everything - Jeffrey Feldberg
When do you tell employees you sold the business?
You tell employees you sold the business after the deal has closed.
Business owners struggle with keeping the liquidity event from employees. Most business owners feel that they owe it to the employees to keep them in the loop as early as possible.
Know this and know this well: in both business and life, timing is everything.
Read "Why You'll Be Wealthy And Happy When You're Ready For Your Liquidity Event."
You tell employees you sold the business after it happens for the betterment of both.
Earlier I referenced a statistic that up to 90% of liquidity events fail. When you tell employees you sold the business after it happens, you can say so with certainty.
There is no room for speculation, gossip, or a mass exodus. The deal is now done.
Together, both you and the new owner can talk about the future with confidence. With uncertainty out of the picture, it will be another day at the business for most employees.
When it comes to timing, it should go without saying to tell employees first. Nothing is more demoralizing for employees to hear the news from customers or the media.
There's a time and place for everything. You tell employees you sold the business first, followed by everyone afterward.
By choosing your timing, you have avoided an unneeded disaster. Imagine this scenario for a brief moment. Employees and customers leave your business from the uncertainty of a deal not yet done.
The deal falls through, and you have a failing business.
With the timing out of the way, do you how to tell employees you sold the business?
Ninety percent of leadership is the ability to communicate something people want - Dianne Feinstein
Tell employees you sold the business after you've completed the deal. In this scenario, everyone wins.
There are three essential steps to take when you tell employees you sold the business. Follow these three steps to create a win for your employees, new owner, and the business.
First, tune in to the "WII.FM" radio station, otherwise known as "What's In It For Me." As great as you and your business are, your employees care about themselves first.
Tuning into WII.FM is understanding what's important and top-of-mind for your employees.
Read "5 Reasons To Sell Hope On Your Exit That Will Blow Your Mind"
Your new business owner has great plans for your business. With your new business owner comes new opportunities for the business and employees.
Employees want to hear how they now have upward mobility in the company. Egos aside, with you out of the picture, there is a defined career path. Employees dream of the day when they can be managers or presidents of the business.
While you're at it, talk about the new opportunities that are ahead for the business. Your new owner bought your company to solve the problem. Discuss new initiatives that have a positive impact on your employees.
Employees revel in the excitement of what lies ahead. Your new owner benefits from a motivated and committed workforce.
One group of employees need to know in advance that you plan to sell the business.
Do you know who?
Many hands make light work - John Heywood
When do you tell employees you sold the business?
For most of your employees, you tell them after you have completed the deal.
There is one exception.
When it comes to key employees, you must tell them about your plans in advance.
As a general rule, your key employees are senior management. At the same time, you may consider someone a key employee who has in-depth knowledge of the business.
Why must you tell key employees in advance of the sale?
For starters, you can't do a deal without their help. Your key employees will help you gather required data, information, and reports.
As necessary, your future buyer needs to see first-hand that your company runs without you.
Read "Why You'll Be Happier And Richer When Your Company Runs Without You."
Your company does run without you, right?
If you answered "no," stop what you're doing. You're not ready to sell your business, at least if you want top dollar.
In the 9-step roadmap, step two is all about X-Factors that increase your enterprise value. A business that runs without you is one of the X-Factors.
When speaking to key employees, please do two things that will have them wanting the sale as much or more than you.
First, tune into WII.FM and talk about upward mobility that is waiting for them after the sale. Second, put in place a liquidity event success bonus. When the deal closes, key employees receive a bonus.
It's essential to disclose the bonus in advance to your future buyer to avoid conflicts. At the same time, most buyers will also pay key employees a bonus when they stay in the business for a period of time.
Now that you know when to tell employees you sold the business, what to say, and how to do it, I have one more question for you.
Do you know why you'll have a clear conscience when you follow this process?
There is no pillow as soft as a clear conscience - John Wooden
Do you feel a duty to tell employees you sold the business well in advance of the deal?
Read "What You Need To Know About Why Most Business Exits Fail."
Let's talk about your commitment to your employees:
If you've answered "yes" to the above three questions, you've fulfilled your commitment.
Your employees don't guarantee that they'll stay in your business forever. In turn, you didn't promise your employees that you'll own your business forever.
Both you and your employees are fair to each other and fulfill the obligations to one another.
The key mandate for employees and the owner of the business is to put the business first. When everyone puts the needs of the business first, everyone benefits. The business grows, thrives, and prospers.
Putting the business first also means having a stable roster of employees. When you tell employees you sold the business before it happens, the business is at risk.
Customers, employees, and your future buyer want certainty. Please give all the stakeholders certainty.
You are not obligated to tell employees you sold the business until it's done. Your answer to the three questions above demonstrates you've fulfilled your obligation.
The takeaway is that you can and should have a clear conscience. Your employees and customers depend on you to create a better tomorrow.
Your liquidity event is one way to ensure a better tomorrow. The business benefits from the new owner's talent and resources.
How and when do you tell employees you sold the business?
This is a question most business owners struggle with from start to finish of a liquidity event.
When you knew when and how to tell your employees you sold the business, everybody wins. At the same time, you prevent unnecessary fear for the employees and damage to the business.
There are five key strategies to follow for when and how to tell your employees you sold the business. Following these strategies protects your business and gives you a clear conscience.
How do I know?
I said "no" to a 7-figure offer and mastered the art and science of a liquidity event. Two years later, I said "yes" to a 9-figure offer. My journey had me create a 9-step road map of preparation. The right preparation helps you create a blueprint to optimize business value.
Today, my mission is to help business owners tilt the playing field to their advantage. The 90-day Deep Wealth Experience, grounded in the 9-step road map, is how I help business owners.
When you're prepared, you have the certainty that you'll capture the maximum value. When you know, instead of believe, you do the right thing at the right time.
Let my in-the-trenches experience and heavy lifting work for your advantage. Take the time now to review the five strategies of when to tell employees you sold the business.
Start with the first strategy and stay with it until mastered. When you're done, move on and repeat the process until you've mastered all five.
The best time to prepare was years ago. The next best time is today. Whether your liquidity event is in one year or ten years, the time to prepare is today.
Here's to you and your success.
Your Raving Fan,