Hire an M&A Professional to Sell Your Business

When should my management be told of a potential sale?

Barbara Taylor
Profile Picture of Barbara Taylor Barbara is the co-founder of Allan Taylor, a boutique M&A firm located in Northwest Arkansas. She began her entrepreneurial journey after moving from Seattle to Northwest Arkansas with her family in 2003. Seeing a need for a decent cup of coffee, she and her husband started the first drive-thru espresso business in the state of Arkansas. They successfully built the business into a popular micro-chain, and eventually sold it to an outside buyer. In her role as a business broker, Barbara combines her first-hand experience as a selling owner with her extensive knowledge of the selling process to help business owners cash out and move on.  Full Bio
Q:I am in the process of selling my business. When should I let my management team know that I am trying to sell?
A: I don’t think there’s any hard and fast answer to this question. I think it’s completely dependent on the type of culture that you’ve built within your business. In my experience, I’ve seen it done all kinds of ways. I have seen people come into an initial meeting at my firm with their CFO or one of their key executives with them. I’ve also seen the scenario where the deal closes on a Friday and everyone gets told at the organization, from the top down, on Monday. So it really depends on the culture that you’ve developed at your organization and who you think needs to know. It also depends on who might be integral to helping with the process of getting the business sold. That’s frequently someone in a CFO or COO-type role.

I guess one of the questions I would ask is this: If you have key managers at your company, why aren’t they being included in discussions about your exit planning? It takes a lot of help to get your business sold, and the process is a lot easier if you have somebody internally who is on your side, and also helping you with the burden of due diligence in particular. I see a lot of business owners involve somebody at the company once an LOI is signed and they have moved into the due diligence phase because there is such a huge administrative chore associated with that. It can be hard to manage it by yourself. There’s a lot of pressure during that time, not only to supply all of the information that the buyer is looking for, but I’ve heard a lot of business owners say that they just get exhausted by the feeling that they are living a double life. They’re spending a good chunk of their time -- and certainly a lot of mental energy -- on getting the business sold. Yet they have to keep it under wraps when they are in front of employees and managers. That's hard, stressful and ultimately exhausting.

Some owners are fearful of key people leaving the organization. Of course, the buyer is typically going to want those people to stay. There are ways to reward employees, like stay bonuses or stock, for sticking with you through the process and through a transition with a new buyer. I find there’s often a lot more fear and anxiety around telling management than there needs to be from a practical standpoint.

From the employee’s perspective, they should care about whether or not you have a solid exit plan in place and a strategy for transition. If you don’t, it does not bode well for the business, which does not bode well for them. Also, there can be a lot of opportunity for employees at all levels when the founder sells, especially if the business is sold to a larger entity or a buyer with more resources. Increased potential for career advancement or lateral moves can be a good thing for everyone.

Truth be told, people within the company are already thinking and talking about many of these topics -- like the owner’s retirement or limited opportunities for career advancement at the company -- anyway.

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