- How to announce the sale of your business.
- How to announce the sale of a business if the founder is remaining with the company.
- How to announce the sale of a business if the founder is leaving.
- How to find natural leaders within a group.
- General tips for announcing the sale of a business.
Acquiring a new business is a hectic experience. There are so many things you need to deal with that it can be challenging to keep track of everything. Learning the ins and outs of the business, hiring a general manager, looking for inefficiencies and technological solutions, and finding the bathroom are all things you need to worry about when you take over a company.
But before you can deal with any of that, you need to know how to communicate the company sale to your new employees.
Exactly how you do this will depend on the existing company culture and your own management style, but being straightforward and clear with everyone will go a long way toward easing people’s minds.
Acquira purchased an HVAC and plumbing business in late 2020 from the company’s founder. This owner, which we also refer to as the seller, maintained a minority stake in the business and planned to stay with the company even after the sale.
Keep It Positive
When the time came to announce the deal to the company’s employees, the leadership teams from Acquira flew to its office to help share the news.
“[The seller] ordered barbecue for everybody and made sure they were all fed,” Acquira Co-Founder, Hayden says. “Then we all came down. We gathered everyone in the warehouse. There were around 30 people, plus us, and he announced it.”
The seller explained that, while many groups had approached him about acquiring his company in the past, he turned them all down because they didn’t have the best interest of the company in mind. But when he met the people from Acquira and our partners, he could see that their culture aligned with the company’s culture. He also told everyone that he would be staying on for a period.
This example works when the previous owner plans on staying on as a partner. In the event that there’s no retention, the owner should simply explain that they sold the business.
At the company, after an uncomfortable silence, the seller began prodding people for questions – encouraging people to speak up and say what was on their minds.
“You could tell it was uncomfortable because [the seller] was really trying to get people to ask questions in front of the whole group and I think people didn't want to,” explains Hayden. “But it was smart of him to pick on certain people because those people then rallied behind us.”
The seller signaled out people who were natural leaders amongst the workers, which Hayden found useful as the incoming owner.
“There was one guy who was clearly the leader in the organization. And it was useful for me to see it. He's like a six-foot-six, giant Lithuanian guy. [The man] said, ‘the way I see it, nothing's changing. We do our job. We do it on time. And we do it well. That's all there is to it.’”
“You could tell he was the man,” Hayden continued. “I had a one-on-one interview with him a couple days later and took a note and showed it to him that said he was a ‘f**king boss leader.’”
Announcing New Ownership
The point of the group announcement is to make sure people feel safe and to get them excited. When announcing the sale of a business, it’s important to make sure people know that whatever changes are on the way, they’re going to be positive. New ownership can mean new opportunities, more work, and more potential.
The group announcement should last about five minutes. At that point, the new owners can introduce themselves.
This process also offers an opportunity to figure out who the leaders of the group are, explains Hayden.
“You'd even physically see it, as [the seller] was talking,” Hayden said. “People would physically move closer to each other. And then you can also see who is confident in speaking up. Those people who are confident will often also be potential leaders.”
“So, Who’s My Boss?”
A common question asked at this point is “who’s my boss?”
In this case, the answer isn’t Tony Danza, but your response could have ramifications that would help your business last at least as long as that beloved 80’s sitcom.
How you answer the question will depend on whether the previous owner will remain a partner in the company or not. In the instance of this business, Acquira was able to reassure people that the seller was still their boss and the firm would act as his support network.
If the owner isn’t staying on, you would announce an interim CEO. That may be the previous owner staying on for three to six months, it could be you, or you may hire someone new to oversee the company for a period of time.
Whatever the case, it’s important to explain that people still report to the same managers. That aspect of their job hasn’t changed. Maintaining a sense of stability will help foster a positive work environment and a loyal workforce that will help you grow the companies for many years to come.
The point here is to remain transparent while calming people’s nerves.
Break Into Groups
After the initial announcement and fielding questions, the seller brought out a cake and everyone broke into groups. As people milled about, the new owners walked around and introduced themselves.
This provides a good opportunity for the new owners to get to know everyone, assuage their fears, and get a reading on the energy in the room.
It’s common to find people who are nervous about their jobs. Some people may start defending their positions right away, while others will be confident and totally at ease. It can be a real grab bag of emotions, but it offers another opportunity to reassure people while getting to know the individuals that make up the company.
We’re Not Taking Anything Away
Part of allaying the nervousness of a new deal is to assure people that, as the new owner, you’re not taking anything away.
“Your jobs are safe, even safer than they were before. We're not taking anything away. That's really important,” explains Hayden.
Healthcare is a chief concern for people, especially in the United States. At another company that Acquira bought, Hayden saw this in full effect:
“One of the guys was really, really anxious and asked about health care,” he explains. “They had good benefits, like 80 percent coverage. When I said we're not taking anything away, he actually cried. He had five kids and his big worry is like, what the f**k do I do? Nobody else is going to be able to offer the coverage that these guys have. What happens if they take away the coverage and someone gets sick? There were tears of relief.”
After you’ve introduced yourself to people in a more casual setting, it’s time to get to know them on a more personal level.
The best way to become familiar with the people who make up your team is through one-on-one meetings.
The goal of the one-on-ones is to reinforce the message from the general announcement and to make sure people feel secure in their jobs.
As Claire Lew, CEO of Know Your Team, points out on her blog, “The first one-on-one meeting with an employee sets the tone for your relationship with this person who’ll you’ll work with every day. It’s the one opportunity you have to set a groove, a pattern, for what you want your interactions to be like, and the standard for what feels good going forward. As a result, investing time in preparing for your first 1-on-1 meeting with an employee is a wise use of your time.”
These meetings also present an opportunity to learn what aspirations each person has for their career. Once you’ve determined that, you can start working together to help people reach those goals, fostering a sense of loyalty and camaraderie that will pay dividends in the future.
It’s also important to note that you may encounter a sense of betrayal between the employees and the seller. In many cases, the employees may have looked at their previous boss as a big brother or father figure and feel misled by the sale of the business. There isn’t much you can do to alleviate this problem, but it is important to be aware of the dynamic.
Point By Point: How To Give to Employees When Selling a Business
- Gather all the employees into a big group. Try and pump people up.
- Announce that the company has been sold. Be clear and transparent.
- Have the seller try and get people to ask questions. Assure people that nothing about their salary and benefits will change for the worse. You’re only there to make things better.
- Look for leaders within the organization.
- Gather into smaller groups to introduce yourselves on a more personal level.
- Conduct one-on-one meetings with each employee. Ask them about their ambitions and goals. Reinforce the message from the general announcement.
How Long Should The Seller Stick Around?
The relationship between the seller and buyer should be well-defined during the course of negotiating the acquisition, but one of the things you will need to discuss is how long the seller will stay around to help with the transition.
If you financed the acquisition using an SBA (Small Business Administration) loan, the seller isn’t allowed to stay on for any more than 12 months as part of the conditions of the loan. Even given that stipulation, it’s generally good practice for the seller to only stay on board for three to six months.
How long that period actually is will depend on the number of employees, the complexity of the business, and how many responsibilities the seller has.
Bring Along Your General Manager
If you’re using a GM, they can serve as a buffer between the seller and the new owner. This is the person who will get to know the employees the best, who will be in charge of motivating them and increasing efficiency. If you can have them there from the get-go, it will make the transition go much more smoothly.
In the case of this company, since the seller had retained equity and was staying as the CEO, the person we brought in was actually an Operations Manager tasked with handling operations so the owner could focus on what he was great at – selling new construction jobs and recruiting talent.
His name is Austin, and he had already started a couple of weeks before the announcement, so people were used to seeing him in the office. He introduced himself to the group and suggested that he’d have one on ones with everyone over the following 30 days.
As a new owner, you’ll have a lot on your plate to worry about. Getting to know the intricacies of a business isn’t a task that can be taken lightly, but before you can even begin that journey you need to announce the sale of the company to its employees.
After all, these are the people who worked so hard to get this company to the point that it was an attractive acquisition target. Without them, the company wouldn’t function. Radical honesty, ethics, and transparency are at the core of what Acquira does. By being honest and upfront with your new employees, you can help ensure that they feel secure in their jobs, and confident in the new owner’s capability of growing the business–and therefore enabling their future growth.
Have you had any awkward moments in your career when working for a company that was acquired? We’d love to hear about them in the comments below. And if you found this article useful, feel free to share it with your network.
If you’re interested in starting your own journey to buy a company, Acquira's training will teach you how to find, appraise, and close on a company. Space can be limited, so apply for the Accelerator Program now to hold your spot.
- The initial announcement needs to pump people up and get them excited.
- Do your best to make people feel safe when notifying employees of the sale of the business.
- Break down into smaller groups to familiarize yourself with the dynamics of the group.
- Use one-on-ones to reinforce everything said during the announcement.
Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.