“Take our 20 best people away, and I tell you that Microsoft would become an unimportant company.” – Bill Gates
Every business owner is guaranteed to have to exit their company at a certain stage. The only choice is whether it will be a planned or unplanned exit. In relation to this, the business owner needs to assess how the exit process will affect their different stakeholders, including their employees.
Throughout the life of the business the owner is likely to have developed close working relationships with their employees based on honesty and shared goals. Therefore, the need for a certain element of secrecy in the preparation and execution of the exit plan, may conflict with the company’s culture, especially when an open-door policy has been in place.
Effect of exit planning on the team
There is no denying that a successful business is often based on the foundations of a strong team, which may be its most valuable asset. Thus, whilst it may be at the business owners’ discretion to exit their company, they must consider the impact on the employees who contribute to the company’s day-to-day success.
Every business is unique, as are the employees that form part of the team. Therefore, the business owner needs to carefully manage the work place community. The exit process may create stress, anxiety, and distractions for the employees, as they have their own concerns about their future and the company’s long-term viability.
Furthermore, throughout the exit process, the team needs to remain focused on the company’s objectives and their careers to ensure the company’s continued success.
Preferred means to inform employees
The company’s sale process takes time, and informing the employees about the plan to sell may create the impression that it will be a quick process, leading to numerous queries for which the owner may not have the answers, especially in the early stages. Additionally, the exit process is time-consuming for the shareholder(s), and distracting employees from their day-to-day responsibilities should be avoided.
There are different schools of thought regarding when to inform employees about the exit process. Some prefer to notify the team once:
- the company is listed for sale, or
- a buyer has been found, or
- the company’s acquisition has been finalised.
As a business owner, you should try to maintain control of the news cycle and ensure that the employees learn about the sale and are introduced to the buyer through your efforts.
Throughout the exit process the owner will need to keep the team engaged and motivated, and be open to their concerns. The departure of a key employee could potentially jeopardise the exit process, so it is crucial to address any fears and emphasise the employees’ importance to the company.
Benefits for the employees
The exit planning process should be seen as an opportunity for the employees as much as for the owner. They may form part of the Acquirer’s team, offering broader career prospects. The company may gain new investment and impetus from the Acquirer, allowing the employees to advance professionally.
Senior management
It is important to remember that when the prospective Acquirer begins their due diligence process, they would likely request to meet with the senior personnel to understand their role in the organisation’s success. This provides an opportunity for senior management to assess the Acquirer’s values, culture, and operation, and to discuss potential synergies and ensure a smooth transition.
Conclusion
Each business is unique along with the relationships that are formed within it. Whilst it is at the business owner’s discretion as to when to inform their employees about the exit process, it should be done while respecting and addressing as many of the employees’ concerns as possible.
The business owner should show compassion toward the employees concerns and ideally ensure that the acquirer also has their interests at heart.
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