This is a question frequently asked by clients who are looking to sell their business: “Should I confide in my team” If so, when and what will happen if the sale doesn’t go through?” If they tell them, they worry, they may look for another job and the value of the business will be affected before it even goes to market.
These are not easy questions to answer. I would, however, recommend that a vendor should confide relatively quickly in, at least, their top team.
The reasons are numerous, but here are some main points:
- They will trust you;
- There’s always the chance that the news will slip through the gossip chain. It will be easier to deal with if you tell them;
- You may need them – whether it’s for the provision of information for a buyer, or that the buyer will need to meet them at some point because of their specific role; and
- You can incentivise them to work with you towards a greater value rather than take the risk of them not supporting a sale, due to worrying about their own position.
How you tell your team is important. In this market, not every deal completes, and you need to make them aware of this distinct possibility. If it doesn’t complete, explain your plans for both them and the company.
You also need to ensure they understand how important confidentiality is. It’s one thing to confide in your key staff, but quite another for it to be cascaded down the ranks and – worse still – externally.
In this age, deals are taking up to a year to complete. That’s a long time to maintain confidence. So, confidentiality cannot be emphasised enough.
Throughout the sales period, keep those you have confided in up to speed with the deal progress. A lack of information causes undue worry and negative speculation. If it isn’t going well, tell them. If it’s going great, likewise.
Across extended deal periods, business performance can change dramatically. It is essential for all parties to concentrate on the business in hand, not the sale – that should be left to the professionals handling the sale.
In order for the team to do this, they should not unnecessarily worry about matters they have little control over, so keep them informed.
Most business values rest in the people that work for the company, whether it be the red hot sales person with the connections to die for, or the operations manager who ensures everything works like clockwork. It is recognising their worth and treating them with the respect they deserve that will smooth the sale process.
Where clients have not heeded this advice, the ramifications have not always been positive. As this situation can so easily be managed, think first before you operate a totally secret process.
Jo Haigh is head of FDS corporate finance services and the author of ‘The Financial Times Guide to Finance for Non Financial Managers’.