Determining the Right Time to Inform Employees of a Pending Sale

By: Michael Fitzgerald

For a business owner, one of the most critical steps in a sale is determining the strategy and timing for informing employees about the impending sale. Effective communication is the key to maintaining trust, morale, and productivity during this transitional period.

Determining the Right Time

We’re often asked by clients when is the best time to tell employees about a pending sale. Some may hope the answer is: after the deal closes. But that is rarely, if ever, the case. Deciding when to inform employees about a company's sale is a delicate balancing act. Share the news too early, and it might lead to uncertainty, reduced morale, and even potential talent defections. On the other hand, informing employees too late can make your team feel blindsided, eroding trust that could have a damaging effect on productivity. Striking the right balance is crucial. Here are a few tips for a seller to determine the right time to share that the company is being acquired:

  • Confidentiality is paramount. Maintaining confidentiality among the parties directly engaged in the transaction is critical. Leaks can have a serious impact eroding trust, reputation, and overall stability. Keep the circle of engaged parties small to begin with. This could be as small as you and your CFO to start.
  • Expand the circle on an as-needed basis. Buyers will want to meet key managers during the diligence process, but keep in mind that you and your advisor control the timing of these meetings. Typically, additional management meetings will occur only after financial diligence is substantially complete and the buyer has confirmed that it is proceeding with the offer as agreed to in the Letter of Intent.
  • Set an announcement timeline. In most cases, a broader announcement will be made when the deal is about to close or immediately post-closing. Consider the impact of this timing on customers, suppliers, and employees, and plan your communication accordingly. Who on your team will talk to key customers and suppliers, and when will they do it? Identifying a concrete timeline well ahead of making the announcement allows for proper preparation of the communications process and will reduce uncertainty about the future of the company for employees.
  • Align all leadership. Before making any announcements, ensure all members of the leadership team are on the same page regarding communication to employees. Consistency in messaging and a united front from management will create a sense of stability.

Strategic Communication

How the news is delivered is as important as when it is delivered. Crafting a clear, positive, and empathetic message is essential to managing employee reactions.

  • Be transparent. While it may be tempting to withhold details due to uncertainty, transparency is crucial. Share what is known about the buyer, the reasons for the sale, and how it aligns with the company's long-term strategy.
  • Address employee concerns. Anticipate and address common employee concerns, such as job security, benefits, and the company culture. Providing as much information as possible early can mitigate fear amongst employees and build trust.
  • Emphasize opportunities. Highlight potential opportunities that may arise from the sale, such as expansion, additional resources, or enhanced market positioning. Reinforce why the acquisition will benefit the existing company to build employee enthusiasm.

Informing employees about a company sale is a process that requires careful planning and a clear communications strategy. By considering the timing and method of communication, business owners can minimize disruptions, maintain employee morale, and ensure a positive environment throughout the transition.