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Surviving a Business Sale: How to Inform & Keep Key Employees

Nothing seems to strike fear in the heart of employees more than the announcement that the business is for sale.  Their reaction is generally fueled by images from Wall St. inspired movies and tales from the web that are generally false.  If you have a good relationship with your employees, you will want to avoid this reaction to the news of a sale.  In addition, it may be imperative that certain key employees help you with the sale, making their comfort and understanding even more important.

shutterstock_548132164.jpgKey Employees

A Key Employee in this context is someone that will assist you with the transaction (a CFO for example) or who will be very important for business continuity during the sale (a salesperson or customer service employee for example). Here are a couple of strategies to follow:

1. Tell them what’s happening, but remember they don’t need to know the transaction details as it relates to the sale price and key terms

You want to be honest with your Key Employees, so tell them that you are contemplating a transaction, but we advise our clients to keep the key terms to themselves.  An announcement of things like purchase price, consulting agreements, etc. that are the privilege of the owner, can cause some friction with Key Employees as you ask them to participate in the chaotic nature of a business sale. 

2. Consider a sale related bonus

A business sale is a lot of work for many in the Key Employee group, in particular, it can take a toll on your financial staff.  For those people that you want to remain enthusiastic about providing information during the sale, consider putting a bonus in place that is related to the completion of a transaction.   One word of caution however, do not make this bonus so substantial that it can have a life-changing effect on an employee.  If you offer a bonus that is too large, buyers can become concerned that those Key Employees will quit the day after the transaction.  Your investment banker can help you determine appropriate bonus plans. 

3. Work with the buyer to structure agreements for the post-transaction period

These are agreements that reward Key Employees for staying with the company for a certain period of time – usually six months to a year.  If the employee has not left, they can receive the payment.  Generally, if they are fired by the buyer, they also receive the payment.  You can create these on your own, without the buyer, but you run the risk of asking the buyer to keep unneeded or unwanted personnel.  Also, you may be on the hook for the amounts of money offered.  If you structure them in coordination with the buyer, you may be able to transfer the dollar-for-dollar risk to the buyer. 


Traditional Staff

For all other employees, communication should happen as close to the transaction announcement as possible.  Generally, this is the day before, the day of, or the day after the transaction is made public.  The key to this communication is to keep people from panicking and looking for other jobs.

1. Remind them that most business acquisitions involve buyers that want to grow the business they just bought – not shrink it

There are generally great opportunities for employees to advance in the new combined company and often, these opportunities would not have been available had the company not been sold.

2. When you make the announcement, have as much information as you possibly can about the things that impact the employees

They will all have questions about the benefits and vacation carry over.  If you can, get the benefits questions answered by the buyer prior to the sale announcement.  Laying out a complete human resources guide from the buyer with all the employee information included, can make a huge difference.

3. If possible, have the buyer, or a representative of the buyer on site when you make the announcement

It can be very comforting if someone from the acquiring group is on site to talk about the day-to-day experience with their employer.  They can speak on corporate culture and where they see the acquisition fitting into the overall company strategy. 


Your employees were a big part of making your business the asset it is today. For a sale to be successful, it is important that you manage their fears and expectations.  This is an important part of any sell-side transaction and your investment banker can be of assistance as you navigate these waters. 

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