Employees make a business. In many senses, employees are the business. While you can certainly take credit for all your own hard work, a great team is a necessary component of success, no matter what industry you’re in.
So when it comes to selling that business, you owe it to your employees to do the right thing. Transparency is key here, and great communication is vital. But how do you go about this when selling a company?
To understand this, it’s useful to disentangle the legal responsibilities from the ethical ones.
Employer Responsibility: Legal Requirements Ahead of Selling Your Business
You may have some legal responsibilities ahead of a business sale. The Worker Adjustment and Retraining Notification (WARN) Act of 1988 requires some employers to provide notifications to employees if the sales of a business will result in permanent or temporary layoffs.
WARN only applies to businesses with more than 100 full-time workers, or more than 100 workers with a combined 4,000-hour working week. It also only applies when at least 50 people will be laid off at a single site.
What’s more, WARN notices are only required when the layoffs take place before the business is sold. If they take place after this, it’s the buyer’s responsibility. If no layoffs are planned, there’s no legal requirement to notify personnel of the sale at all.
Ethical Considerations: Communicating with Your Personnel
Legal responsibilities are all well and good, but you probably want to do a bit more than this. Communicating with your team ahead of the sale is your chance to show your staff how much you have valued their work, and how much you respect them.
It’s definitely a good idea to be transparent when selling your company, but precisely when and how to do this can be tricky. Here are a couple of things to bear in mind:
Informing your personnel early in the transaction will make them feel part of the sale process and give them confidence that their roles are safe. They may even be able to help with a smooth transition.
However, informing them too early could put the transaction at risk. If the sale is contingent on key members of staff remaining with the company, this could be put into jeopardy if they leave.
On balance, it may be best to communicate with your team once the sale has been agreed upon. This means you will have all the answers to any questions that may arise. As transparency is so important, being able to answer the questions of concerned employees is vital.
This still gives you the chance to involve your team in the process. The business buyer will need orientation and training as part of the transition, and delivering this can give your team members confidence that their jobs are safe.
If you leave your notification too late, however, you run the risk of your staff hearing about the sale from another source. This could be harmful too, as personnel will be less inclined to support the transition that follows.
Supporting Personnel When Selling Your Business — A Difficult Path to Navigate
Whether a legal responsibility or an ethical consideration, supporting your team is vital when selling your company. But this can be tricky. Here at The Batallan Group, we have long-standing experience in supporting business owners through this difficult process. Reach out to our team to learn more.