Your employees have stuck with you year after year, working hard to help build your business into a thriving enterprise. You wouldn’t be where you are today without them. So when it comes time to sell your business, it’s not surprising that you are concerned about their future. Will the buyer keep your employees on, or will he just "clean house” and put his own people in.
What’s the Buyer Buying Anyway?
Your business may have lots of equipment, vehicles and inventory. Or it may have long-term contracts, intellectual property or other valuable assets. Or it may be a service business with very little in the way of hard assets. In either case, it has one critical component– its employees. Your assets couldn’t generate revenues without them. It’s your employees who have the customer and vendor relationships and the specific knowledge and skills that generate revenues and profits. It’s your employees who make your company valuable.
As worried as you are that a new owner might let your employees go, the new owner is more worried that your employees might quit! After all, what would happen to the value of your business after the sale if your key people left? Rather than “clearing house”, we find that new owners usually bend over backwards to make sure that the existing employees stay on and feel like they are valuable members of the team. They may offer (or insist on) employment contracts for key people. They will maintain current compensation and benefits. They typically don’t make any major changes for six months to one year after closing. And, oftentimes, they ask that you, the existing owner, stay with the business for a period of time after closing to help smooth the transition.
So the worry that you may have that your employees will all get fired after the sale is largely unfounded – the new owner needs your employees and wants them to stay. Here’s a brief outline of what to expect with three different types of buyers:
1. Entrepreneurial Individual Buyer
If an individual buys your company, he will likely do his utmost to keep your entire staff intact. He will essentially step into your shoes and, over time, learn the operational details of your business. He will rely on your employees to keep the operation running smoothly.
2. Equity Fund Buyer
An equity fund buyer may already have an experienced manager to step in and run the company or, as often happens, may promote your second in command to COO and incentivize him or her with the ability to earn an ownership position in the business. In either case, equity fund buyers will typically want all of the existing employees to stay on.
3. Industry Insider Buyer
If an industry insider buys your company, there may be some positions that the buying company’s existing staff can take over. Sales and production staff are typically safe, as are most lower to mid-level managerial positions; however, some higher-level managerial positions might be eliminated.
For more information about issues that relate to selling your business, please visit us at www.primeinvestments.us. There are lots of white papers to download and blog topics of interest to business owners. If you would like to have a confidential discussion about your personal situation, click here, click on the link below or call us at 240 290-5000 We’ll be happy to schedule a free initial consultation and complimentary business appraisal.
There’s never an up-front cost or obligation, and all communications will be held in the strictest confidence.
Prime Investments Business Brokers takes the risk out of selling. For over 25 years Prime has been helping business owners in Virginia, Maryland, Pennsylvania, Florida, Georgia, Delaware, New Jersey and Washington, DC sell their businesses – without charging upfront fees.
