There are a number of factors to consider when selling your business, and one of the most important is the welfare of your staff. You have legal and moral obligations to your employees, of course. But your staff can also be one of your major assets when selling your business.
When you sell, your employees may either transfer with the business to the new owner, or end their employment with the business, so it’s important to keep communications open as much as possible.
This is an area of some confusion. Some business owners worry that telling employees and customers about the sale of the business will be a negative action. They fear staff will stop putting in the effort, and customers may go elsewhere.
But the opposite is true. If you try and keep it secret, your staff will find out eventually and may very well feel resentment. Then you will have a problem with negativity. And that could cost you the sale of your business.
In just the same way a potential buyer will look at your company’s finances and prospects, they will also look at your workforce. The chances are that they will buy your business as a going concern, keeping some or all of the staff.
But if they walk into a resentful, negative workplace, where productivity has become an issue, it could well put them off buying.
Keep your staff up-to-date and in the loop, and it will be business as usual, presenting an attractive investment package to any potential buyer.
An influential paper in the Harvard Business Review in 2004 noted that the skills and talents of a company’s workforce constitute an intangible asset – and that such assets are worth far more to many companies than their tangible assets.
A company’s assets fall into two categories: tangible and intangible. Tangible assets include buildings, equipment, inventory and so on. Intangible assets include intellectual property, such as patents, trademarks and copyrights, as well as market share, customer loyalty – and human capital, the term for the talent and ability of the workforce.
While it’s common for businesses to describe their employees as valuable assets, it’s not really the employees – it’s their abilities. The skill set of your company’s workers is an asset, and since abilities can’t be touched, it’s an intangible asset.
When you sell that ends an employee’s position with you, the former employer, so you must give your employees notice of ending employment or provide payment in lieu of notice.
When employees transfer with the business, you’ll need to give all relevant employee information to the new owner. There are some employee entitlements that the new owner must recognise and others that the new owner doesn’t have to recognise.
Keep in mind that some staff members may find the change stressful, so give them as much notice as possible so they have time to think about their options.Treating your employees fairly will help to ensure they continue to work efficiently and give you plenty of notice if they move on to new jobs.