One of the bigger concerns Sellers’ have when considering the sale of their business is the word getting out.

Employees find out and quit.
Clients leave.
Profits dip.
And the deal falls through.

This is the worst case scenario, but fortunately it is also an uncommon one. While discretion and finesse are required, there are precautions that can be taken to greatly mitigate any risk of transitioning the business.

To Tell or Not to Tell

Every business book tells you to keep the transaction confidential until the business transitions hands. This is the smart money move to make sure everyone stays on board (employees and clients) until the new owner can manage the conversations with the stakeholders of the business.

However, the temptation often is to be honest with your team and clients. It was for me when I sold my business. I told my team about it when I began considering offers, early on, before any offer was accepted. I knew this was a risk, but my honest relationship with my team is how I got to where I was and I wanted their voices to be heard. They had a lot of questions, and I didn’t have enough answers for them.

… Who would you sell to?
… What happens to our jobs?
… Will they cut our hours?

Let alone all the questions they couldn’t verbalize or were uncomfortable in doing so. My goal was to be honest, but the message of honesty was trumped by concern. Fortunately, everyone stayed on board and the transition went smoothly, but there was a lot of hand-holding involved to transition everything over.

By waiting, you will have specific answers available for everyone affected. You will be able to answer questions about who is buying the business, what their intentions are, what will be happening to their jobs, and how this is an opportunity for them (growth, promotions, influence, etc.).

Keeping It Under Wraps

Non-Disclosure Agreement: Before we begin conversations we will gladly be signing a NDA. This documents binds us to confidentiality, and what is said and shared stays between us.

Mutual Interests: In addition to the NDA, we also don’t want the word getting out. Much of the value of the business is in the employees and clients the business retains. If employees start quitting or clients walk away, this greatly impacts our ability to make a deal.

After Hours Visitation: If there is a physical location the business operates out of, an in-person visit after hours is usually a sensible approach.

Informing Affected Parties

This tends to be a highly custom process. When and how to inform employees and clients will depend on factors specific to the team and business.

Delayed Notification: Some transactions operate in silence, and the new owner doesn’t account his ownership until months later. This way, the clients and team know it’s “business as usual” and no one is worried about the relationship.

After Closing: This is the more common approach, and allows employees to be informed once the business changes hands. Typically, a team meeting with the new owner (us), previous owner (you) and the team shortly after the transition is what makes the most sense. Introductions can be made and questions can be answered. If the owner is client-facing, it may make sense to inform clients at this time. If the owner is not client facing, it usually makes more sense to wait and let the business’ performance bear itself out before making an announcement.

Every business and every relationship is different, but I am happy to say that deals rarely fall through due to “the word getting out”.