The M&A process is very demanding and a business owner should be enthusiastic when they find a compatible buyer for their company. One fact that should never be overlooked during the sale process, however, is that your employees may not share your excitement. Employee dissatisfaction can negatively impact a deal’s ultimate value or even cause its collapse. Therefore, it’s important to plan how to sell your sale to your employees before the deal is announced.

Breaking the news

Once you begin the M&A process – likely as soon as you start preparing your company’s financials for the market – news that major change could occur is likely to filter down to employees. Unconfirmed rumors, assumptions surrounding worst-case scenarios, and employee feelings of powerlessness over the future of their jobs can cause considerable morale problems, particularly if management remains silent.

Deal negotiation details need to be kept confidential for legal and strategic reasons, but the management team should be in regular contact with human resources staff and midlevel managers to get a sense of what employees are hearing and whether they’re spreading misinformation. If rumors are circulating, you could hold a company meeting to let employees know that a sale is being considered and to dispel untrue information. If you aren’t in a position to reveal details of a possible deal, simply tell them that.

Don’t sugarcoat facts

Once you’ve negotiated the details of your transaction and signed a sale agreement, work with the buyer to get employees up to speed. They should be briefed on their new owner’s business, culture and strategic objectives. You should consider holding informal introductory or Q&A sessions with small groups of employees and the buyer’s management team.

You don’t want to create a sense of panic, but don’t sidestep hard facts, either. If layoffs or relocations are in the new owner’s plans, employees should know as soon as possible. At this time, you and the buyer may also want to discuss compensation, buyouts or retraining opportunities the new owners plan to offer.

Employee investment is key

Employees will naturally be worried about the new owner’s corporate culture and how they’ll fit into it. A good employee who’s been working hard for a promotion, for example, is likely to be concerned about unfamiliar management and the need to start over proving him- or herself to the new management staff.

To prevent this kind of anxiety and help ensure that key employees stay with the company, work with your managers to identify valuable and high-performing individuals. Introduce these individuals to their new managers so they can initiate a working relationship before your company is absorbed by the new ownership.

Be open and honest

Change is always difficult for employees, particularly those who have been with the company for a long period of time. But as long as you’re proactive – heading off rumors early, communicating the facts as soon as possible and easing the transition for key employees – you should be able to sell most of your employees on your sale.

This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Mariner Capital Advisors does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.