Telling Employees That You’re Selling Your Business

If you are a business owner and you are planning to sell your business, there are obviously many obstacles that you will need to face. One of those obstacles is informing all your employees about the intended sale of your business. This needs to be done carefully and at the right time or else you will make your employees feel uncertain about their future in the company. They might assume that there will be layoffs to follow after the sale by the new owner. As a result, their current job performance will get worse and it will affect the overall productivity of your organization. Then it will be harder to sell your business if its value is getting worse instead of better.

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The proper timing is the most important thing when it comes to notice the staff that you’re selling your business. But this doesn’t mean you will tell every employee in the company about the business sale at the same time. There are different staff levels that will need to get told at different points throughout the sale. You will start with the managers first and then move on down to the lower level employees after it looks like the sale is a done deal. More about this will be discussed below.

Related: How to Prioritize Your Employees When Selling Your Business


When you have made the decision to sell your business and you are confident in that decision, the first thing you need to do is notify your senior level managers about it. After all, they are the ones in charge of major operations and departments within the company. They need to stay in the loop about what you are planning to do with the company in the near future. That way, they can make the proper management decisions to accommodate the preparations for the sale. This doesn’t mean they are going to tell the lower level employees that they’re in charge of about the sale. It just means that they’ll be ready to make decisions or maybe even partake in the sale itself.

You will be highly dependent on your senior level managers to help ensure that the sale of your business goes smoothly. You need to get them excited about the sale rather than have them feeling worried or stressed about it. That is why before you tell these managers about the sale, try to figure out the benefits they could get out of it. For example, you might want to offer your senior managers a bonus just to stay with the company throughout the duration of the sale. This is a bonus that would only be paid to them out of the proceeds of the sale. Because of this, the managers would have an incentive to stay with the company and to put in an extra effort toward helping the sale be executed without any problems.

When the new owner of the business takes over control, there is no telling which managers they may or may not lay off. The senior-level managers have no real guarantee that their jobs will still be there after the new owner takes control. This is the reason that managers usually begin looking for new jobs as soon as they know the sale of the business is underway. So, by offering them a bonus to stay with the company until the sale is complete, it allows the operation of your business to remain the same. Otherwise, if your managers were to start sending out resumes and neglecting their managerial duties during the sales process, it might affect whether a buyer will want to go through with the deal or not.

Before you go looking for an outside buyer, perhaps you could offer your senior level managers the opportunity to purchase your business instead. After all, they are already familiar with the business and how it is operated. You wouldn’t need to really train them on anything because they already know everything there is to know about running the business. Plus, owning the company would obviously give them even more job security. The only challenge for them will be coming up with the funds to purchase the business. You could set up a Management Buyout Plan where the senior managers pool their money together to purchase the company. Either that or they will obtain financing together to complete the purchase and take over ownership.


At this point, your senior level managers should at least be aware of your plans to sell the business. Now the next question is, when do you tell your lower level employees about the change of ownership? This will definitely not be something that you would do if you’re just thinking about selling the business. In fact, it is better to be completely transparent with your employees about your intentions to sell the business until much later in the transfer process. The exact time when you will tell your employees will ultimately depend on the business itself and its culture.

Thierry, from Kohezion says that selling your business is all about preparing your team, and making sure that the incentives of the buyer are alined with the team, before the change of ownership happens.

If you have a small business where you work with your employees every day, they are likely going to trust you more because they know you. But if you are running a big company where you don’t even know your employees, they will likely feel uneasy if they learn the company is going to be sold soon. They’ll be thinking about their jobs more than anything else, like whether or not they will even have a job after the new owner comes. Since lower level employees are the most expendable, a new owner may want to restructure the organization by laying off numerous employees in different departments. This is what will worry employees the most.

Therefore, employees who learn about the sale of a business too early on in the process may decide to look for another job before the sale is completed. If you have numerous employees quitting their jobs and going to other companies, this could spell trouble for the productivity and value of your business. It may even have a negative impact no your ability to sell the business to a potential buyer. So, for this reason, it is best to treat the sale of your business like a secret covert operation until you have a signed sales agreement with the buyer.

However, in the case of small businesses with only a small number of employees, you could think about offering them an Employee Stock Ownership Plan where they would purchase the company from you. This creates the ultimate incentive for them to stay with the company and work harder to increase its productivity. Meanwhile, you wouldn’t have to worry about hiding the sale from anyone because the employees will be the buyers in this scenario. It is a win-win for everyone involved.

Selling Your Business to Employees

Video: One of the first things owners worry about after deciding to sell their business is when (and how) to tell employees. Here’s what you need to know by Isaac Rodriguez, an expert.

Related Case Study: How to Keep Your Employees Happy and Motivated

Your Change of Ownership Letter to Employees

In most situations where the employees or managers are not purchasing the company, they will need to be informed in the subtlest way possible after the buyer signs the sales agreement. By this point, the employees probably have suspicions already about a possible sale because they’ve likely seen professional-looking people in suits being shown around the work environment. This is usually a clear sign that something big is happening with the company.

Once the deal is made, you need to notify your staff about the sale of the business and why it is happening in the first place. It is natural for your people to have a lot of questions after they learn about this news, so it is your job as the owner to provide these details in the best way possible. This means you need to send out a change-of-ownership letter to all the staff which outlines the details of the sale and what employees should do.


Content of Letter to the Staff:

The Reason

Why is the business being sold? This is a question that people will want to be answered. Remember to always be professional in your written content to the staff. For example, if you are selling the business because it is losing money, you can begin your letter by highlighting the many years in which the company was thriving and successful. Then toward the middle, you can get into the details about the events that have happened over the last few months or years which led to this sale taking place. Be empathetic and compassionate toward your employees and make them feel like they are valued.

Related: How to Sell a Business That is Losing Money

The Time of Sale

Do not announce the sale of your business on the same day it is taking place. Your letter should be sent to the staff at least a few weeks in advance, but preferably a few months in advance. This will give employees enough time to absorb this stressful news and decide what to do without potentially losing their job right away. They may want to look for another job in the meantime, so you could offer them an incentive to stay until the end (just like with the managers). Then you can maintain productivity in the meantime.

Employee Benefits

You may have a lot of employees with certain benefits, such as health insurance, dental insurance, tuition reimbursement, sick hours, vacation hours, and so on. They will want to know what will happen to their benefits after the sale takes place. Will they get paid for their vacation and sick hours if the business closes? How long will their insurance plans and tuition reimbursement plan last if this happens? These are the questions that you must answer in your letter to them.

Operational Changes

When the transition of business ownership takes place, there are often operational changes within the organization which take place as well. Employees need to be informed about what changes will take place. For instance, if the business is closing or being moved, then you may need to tell employees on the tasks they will be expected to do in the weeks or months ahead. Perhaps you will need them to erase hard drives on computers or pack items around the office. Whatever operational changes are coming, let them know ahead of time in your letter.

Related: Addressing the Need of Short Term Internal Changes

Letters of Recommendation

One of the biggest worries that employees will have is finding a new job (assuming they won’t get to keep their job after the new owner takes over). When you write your letter to the staff, you need to reassure them that you will provide letters of recommendations, so they can have an easier time finding another job. You could even go a step further and give them a list of other similar businesses in the area which are hiring. The more confident that your employees feel about finding another job, the better they will feel during this transition.


If you follow these suggestions, then selling your business should go smoothly. Employees will always feel nervous when they hear the news about the sale, so it is your job to make the transition as painless and stress-free as possible for them. Not only for their sake but for your company’s sake as well.


How Prepare Your Communication Plan

Informing Customers About the Transfer of Ownership

Published by ExitAdviser |

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