Do I Tell My Staff That I’m Selling My Business? (The Story of Agent John Revisited)

Recently, I was reminded of an intriguing voicemail from ‘John’ (not his real name), one of our business sellers. In a confident voice, his voicemail went:

“Hi Zoran. I just wanted to tell you that our outstanding balance on that order will be fulfilled tomorrow” click

It was a strange message. Did he have the wrong number? No, because he referred to me by name. So what did he mean? And then it hit me.

I knew exactly what he meant….

Behind John’s voice, “…our outstanding balance on that order will be fulfilled tomorrow,” was another cue to its meaning: voices. There were voices in the background; the familiar sounds of everyday life in a business. He was at work and he was sending a coded message that read:

Top Secret. Your Eyes Only. Dear Zoran. I am writing to inform you that I will be signing the contract for the sale of my business tomorrow. There are too many staff around so I must speak in code. Regards, Agent John [End of Message: Burn After Reading]

Should I tell my staff I'm selling

John, like so many business sellers before him, had decided to sell and found himself leading a double life. On one hand, he was working towards a big life change: selling his business. But to his staff, he felt he had to act like it was business as usual. He was like James Bond undercover; he had secret email addresses, secret forms and files, and he was sending coded messages to his business agent.

So, What Should John Do? Should He Retain His Secret Agent Status or Blow His Cover?

It’s different for every business. Truthfully, for some businesses, telling your staff that you’re selling may not be the best course of action. But for others, there are serious tactical benefits. Let’s look at the Pros and Cons of telling your staff that you’re thinking of selling.

Cons of Telling Your Staff

  1. Staff May Leave: They might fear for their jobs or treatment under a new owner. This could cost you money in retraining and, if it happens too close to the deal, negatively affect the sale.
  2. Confidentiality Risk: Your staff might tell others. You might consider asking them to sign a Confidentiality Agreement.
  3. Decreased Motivation: If they know you’re going, they might not feel the need to ‘impress’ you anymore.
  4. Job Uncertainty: This is potentially the most damaging, as it creates uncertainty among your staff about their future employment.

Careful management is needed to alleviate employee concerns. One-on-one, let them know that their experience and services are needed, and therefore, a new owner will also need them. Involving them in the buyer inquiry process through introductions to potential buyers can help. Anything you can do to alleviate this uncertainty will offset the majority of the cons associated with telling your staff that you are selling your business.

Pros of Telling Your Staff

  1. Time to Acclimatize: Staff will have time to get used to the idea, lessening the likelihood of them leaving when they find out later. This information can be leveraged to improve the stability of your business in the eyes of a buyer, increasing its saleability.
  2. Manage Uncertainty: You can overcome your staff’s uncertainty through careful situation management and introducing them to potential buyers.
  3. Employment Contracts: You can place certain key staff members under employment contracts, raising stability for potential buyers and thus increasing saleability.
  4. Potential Buyers: Your staff and their contacts know the business intimately and could be ideal candidates for buying the business.
  5. Simplified Due Diligence: The buyer doesn’t have to come after hours or operate in secrecy. They can actually meet the staff, building confidence for the buyer and setting the staff at ease.
  6. Training Opportunities: You can train key staff for tasks you currently fulfill, reducing reliance on you and increasing the attractiveness of the business for new buyers.
  7. Peace of Mind: It’s done. They know. You don’t have to lead a double life anymore.

The Big Reveal

To tell you the truth, John didn’t leave a message. It actually happened about 20 years ago. And John wasn’t his real name. His real name was Zoran… It was me. I, Zoran Sarabaca, left that message for my solicitor at the time.

So what did I do? It was the second business that I’d owned and sold, and in the end, I decided to tell my staff. Amazingly, one of my staff ended up buying the business. As a side note, years later, I helped him sell the business again to someone else. For me, it was the right thing to do, and I have absolutely no regrets.

In the end, a business can be sold with or without the staff knowing. What you should do in your situation really comes down to a decision on a case-by-case basis. So read through the Pros and Cons above and weigh them against each other. If you have any questions, leave a comment below or feel free to contact us.

I look forward to hearing your story.

To talk to us about your personal business sales situation, please don’t hesitate to call us on (02) 9817 3331 or click here to leave an inquiry.

Thank you for reading!

Zoran Sarabaca

Image Source: Unsplash