A key step in selling a business is when you should tell employees that the business is for sale. This may seem simple considering all the complexities surrounding selling a business, but don’t be fooled. It is wrought with pitfalls that can potentially kill the deal, tank profits, lose clients, and hurt the business long-term.

We don’t recommend selling a business without representation, and this is one of the core reasons. You need guidance on hundreds of nuanced, structured, and unstructured elements revolving around selling a business to ensure you attain the maximum value for your hard-earned work. However, you only achieve the maximum value of a business if the deal gets to the closing table. Telling employees about the sale of the business prematurely can cause a deal to go south quickly. 

The Top Five Things You Need to Understand Before Telling Employees About the Sale of a Company
 

1. Do all businesses for sale sell?
   
   Short Answer: No.
   Longer Answer: This is critically relevant to the topic of employee notification. Statistically, most business acquisitions, especially those without experienced representation (an experienced business broker or M&A advisor), don’t make it over the finish line.
   
   The odds of achieving a successful closing when selling a business vary based on its complexity, industry, value, market conditions, business type, buyer quality, and hundreds of other conditions—misteps along the complex process lower the chances of a successful business sale, which is why we don’t recommend telling employees about the sale of a business until it’s necessary.
    
2. Do employees need to know the business is selling?
   
   Short Answer: No. 

Longer Answer: Let’s take a thoughtful look at this. As a business owner, you’ve likely worked hard to build something meaningful. You’ve probably made sure your team is paid fairly, provided benefits when possible, and created a safe, welcoming environment. You’ve made sacrifices—late nights, weekends, missed personal events—all to keep the business strong and ensure everyone got paid on time. If that sounds like your story, then you’ve done what responsible and caring owners do.

When it comes to selling a business, it’s understandable to wonder whether to share that with your team early on. But in most cases, it’s just not the right time. Selling a business is a long and uncertain process, and raising the topic too soon can cause unnecessary worry or distraction, of which you do not share now.  The best thing you can do—for your staff, your buyer, your customers. and your business—is to stay focused on running it well, continuing to lead with integrity and care. You’ll know when the time is right to have that conversation and most often that is after the deal is done.  Until then, keep being the great owner your team depends on and when you sell make sure that the deal continues your business values.

3. When selling a business, could telling employees kill the deal?
   
   Short Answer: Yes.
   Long Answer: If you're selling a business, if you’ve made that decision, you have a long journey, and the journey of selling a business is wrought with pitfalls, and unnecessary employee panic is an avoidable doozy of a pitfall.
   
   Until there's a qualified buyer, a purchase agreement, or at the very least an LOI (letter of Intent), there’s nothing to tell them; you don’t have a deal, so there is no benefit to pulling the trigger earlier than necessary.
    
4. Should I tell my management team I’m selling the company?
   
   Short Answer: Maybe
   Long Answer: Some may say telling any employee should be the last thing you do, but that’s not always the case; every transaction is different. 
   
   Employees could get nervous, no matter how much you assure them that things will be fine. Some will immediately start dusting off their resumes and looking to jump ship. This can affect your numbers, profit, company hierarchy, and jeopardize clients and revenue. When you buy a business, you want to see stability, know there is reliable talent to run the business, keep clients happy and profits flowing. If employees start leaving, that can send a bad signal to the buyer and spook them away from the deal. Telling employees can also distract them from the work at hand.
   
   On the other hand, there are situations (with a well-thought-out plan) where looping in key players on the management team can be beneficial (check with your local business broker or advisor). You can often leverage key members of your management team to help navigate the sale of the business, even making them part of completing the deal.
   
   Providing a bonus post-transaction ensures key employees in the know are part of the transaction's success and that nothing interferes with the company's day-to-day work. It can also mitigate issues with employees pre- and post-sale and set up these key team members for accelerated growth with the acquirer.
    
5. What is the appropriate time and way to tell employees the business is being acquired?
   
   Short Answer: Situations Vary
   Long Answer: Situations Vary.
   Again, best to speak to your business broker or advisor to see what’s appropriate for your specific situation, but the answer to the when question is likely to be, only when absolutely necessary.
   
   When you tell them about the sale of the business, have a thoughtful, structured plan. Include all the benefits (for them) related to the acquisition and be upfront and honest; these are people who are going to be nervous about their livelihood, so take that very seriously.
   
   Be prepared for all their questions, take the time to listen to them, and put their concerns at ease. Tell them why you're making this move and what you know about the acquirer and their plans. Change is scary, but it is also exciting. Focus on the excitement.
   
   The fact of the matter is that if they leave pre-sale to work for someone else, they are likely putting themselves in a worse position. They will be working for someone new either way. If they stay, at least they know their job, culture, and coworkers, and they have an opportunity for more rapid growth without a learning curve, climbing the ladder faster than starting over within a new organization.

The advice above is not the perfect fit for every situation, and may not fit your situation, so at the risk of sounding like a broken record, if you’re selling a business, engage a business broker. A seasoned business broker has been through this before. They will expertly guide you and provide direction to navigate this specific situation. A local business broker knows the market and has the experience and resources to get you to the closing table and beyond. 

You can only get the maximum value for your business
if the deal gets across the finish line.

Find an Expert Local Business Broker