Employees Can’t Serve 2 Masters
Remember This When Selling Your Business
Let me set the stage for you. If you are a business owner and you have decided to sell your business, one of the biggest fears is that during the process of selling, your employees find out about it, get nervous and scared, and quit, leaving you not only empty-handed to run the business, but also a business with no employees — and possibly losing the sale of the business. Any one of these issues could be the kiss of death.
Knowing this fact and having sold over 859 businesses, I have a process that emphasizes confidentiality when selling the business and sharing with the employees only when the time is right and in a manner that allows things to go smoothly for both the business owner and the employees. And I can proudly say I have never encountered a situation where the managers or key employees fly the coop before the closing, because of the process and procedures that can be implemented. However, even with all the planning and processes in place, you can’t change human nature. By this, I am talking about what happens when you do tell employees about the sale of the business and how they respond.
Case in point: I had six excellent convenience stores for sale scheduled to close at the end of August, with a timeline to inform the managers and employees during the first week of August. This is common practice, because if the employees had not been told at this time, there was a very good chance they would have found out about the sale from reading the paper or from a friend because the new owner applied for liquor licenses. And the last thing we want is for anyone to get blindsided in the selling process.
The owner and I talked extensively about when and how the employees were going to be told about the sale, and as an owner of convenience stores in a tight labor market, he was worried about employees quitting. Because of the procedures we had implemented, I knew this would not happen, and it didn’t. However, I did warn him that once he told the employees, they would begin to treat him differently even though he had a long relationship with them. I shared with him that from the time he tells the employees, he will notice their sense of loyalty and duty shift to the new owner.He was in denial and said that wouldn’t happen because he was close with some of his managers, having worked together for more than 10 years. I said I understand, but I know what I am talking about, and you need to be prepared.
Well, you guessed it. Old Terry was right. My seller had to admit that a few days after he told employees about the stores’ upcoming sale, none of them ran for the hills because of the procedures in place. But subtly, their demeanor and attitudes toward the soon-to-be past owner shifted toward the new owner. My seller was a little hurt at first, but then told me, “Ok, I get it. They are trying to impress the new owner who is going to be giving them their paycheck going forward and not me.”
Human nature is a hard thing to change even in business. The moral of the story is you can only serve one master, and when it comes to selling one’s business, be prepared for this issue to arise and don’t let your ego get bruised, because it is part of the process. Our goal is to have a smooth transition from the seller to the buyer and get the deal closed. Your ego will heal right after the money gets wired into your account.
Article courtesy of Terry Monroe, American Business Advisors Newsletter.