October 18, 2022
No, absolutely not. We come across this question very often, and there are a whole host of different arguments for and against informing the staff of your future plans, but the short answer, as well as the long answer, is telling your staff about plans to sell a business is a bad idea, both from a business perspective and a moral perspective.
The business perspective
If you tell your staff you are considering a sale or disposal of your business and you are looking to retire or move on to other things, I can guarantee that some of your staff, if not all of them, will immediately start looking around for other jobs.
I can tell you this because not only do we undertake business brokerage services, but we are also recruitment consultants and we often see unsettled staff registering with us in clusters around firms. They may of course not tell you this, and be very supportive of your plans for disposal. You may get them involved in meetings with the potential buyers so they are comfortable with the purchasers coming in, and they may well pay lip service to this and be very helpful, but the reality will be that at the same time they will also be looking around for other work and may well have left by the time your new buyers come in at a later date.
So, from a business perspective, if you inform your staff, regardless of their length of service, you may well be damaging your own business, because some or all of these staff will be looking around for other work in the short term. Selling a business is essentially selling a functioning team of staff in most cases, and you cannot have a functioning team of staff if they have all left or they are looking around for other work.
Although recruitment can be very easy at certain times in the economic cycle of boom and bust, there are times when it is nothing short of a nightmare to replace staff who are departing.
Moral perspective
Quite often, owners of firms will tell us that they feel a moral obligation to inform their staff of their plans, because it’s not fair to just one day announce they are leaving and someone else is coming in. This is surely unfair they say, and they have a duty to their staff to inform them of their plans to sell.
We would argue against this on the basis that if you feel a moral obligation to tell your staff, do you also feel a moral obligation to cause them severe amounts of distress and uncertainty in their lives? Your members of staff may be dependent on you for their income to pay their mortgages and bills, and if you start telling them of plans to sell or leave, and affect their own circumstances going forwards, then you are essentially unnecessarily giving them huge amounts of stress to cope with that they did not necessarily need to have. If you had simply sold your practice and then informed them that things were about to change, they would have no uncertainty at all up to that point. This point goes back into the business perspective side of things, in that you are selling a business, and this is a business decision, not a personal decision. Your members of staff are also working, because this is their business, and they undertake the work in order to feed themselves and their families.
Example
A quick anecdotal example of a firm where the partners felt the need to notify the staff was a firm in the south west, who rang me up out of the blue one day to ask for our advice in relation to a deal they were doing. The owner explained that he had started to negotiate a deal and felt obliged to notify one of his key members of staff, so she was aware of what was happening. This key member of staff was the supervisor for a department. When this lawyer heard about the owner’s plans, they immediately asked for a pay rise. When this was not forthcoming, they submitted their resignation.
This meant that when it came to the sale prospects, the buyer no longer had that lawyer in the firm, and if they had gone ahead with the purchase they would have needed to immediately recruit someone. If the seller had simply got to the date of the deal, signed the contract, and then notified his staff, then there would have been no issue for them. The deal would have gone through, and whether or not the member of staff had tried the salary rise out at that point or had simply left, would not be a matter for the seller and more a matter for the buyer.
Harsh?
You may think this is a little bit of a harsh position, but at the end of the day, when it comes to selling the business, you cannot be responsible for what happens after you sell the business, and it is for the buyer to accept the risk that members of staff could leave at any time, and to work accordingly to avoid this.
So, in summary we definitely think it is not a good idea to tell your staff of any plans to sell your business. They are, after all, the service you are looking to sell, and they do not need to necessarily know of your own personal circumstances.
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