This month’s blog series on confidentiality has left out one very important detail: when to share that you’re selling your business. Every merger and acquisition transaction hits a point where confidentiality is shed, and the news comes out. However, this still must be done tactfully at the right time. So, what does that look like?
Key employees and stakeholders should be among the first group of people you notify about the sale of your business. Employees such as a CFO or controller and stakeholders with the power to veto a change of control should be at the top of your list. Other key employees may include your CMO, COO, and the head of your sales team. However, it’s integral that you keep in mind last week’s lesson on non-disclosure agreements. An employee reacting negatively to an M&A announcement isn’t unheard of, so it’s best to prepare for the worst.
Next, you should inform important partners and vendors. For example, if you’ve run a lucrative sandwich shop for thirty years, and you purchase all of your bread from a specific bakery, you should notify the bakery of your decision to sell. Over the thirty years you’ve worked together, you’ve likely built a relationship with them. Not only should you tell them about your decision to sell, you should also inquire if they are willing to continue supplying your business under a new owner. Additionally, you may get an unexpected offer from your vendor when they realize they have the chance to make a strategic acquisition.
Much like your partners and vendors, you may have built a relationship with some of your key customers. If any of your customers make up a large portion of your overall sales, it’s important to communicate your decision to sell with them. Potential buyers will want to know if your business comes with these customers, so disclosure is inevitable.
At some point, the announcement must reach your team at large. The timing of this is very important. Notifying employees that you’re selling may create a sense of instability or unease. It’s possible that some employees may seek out other employment due to a fear of losing their position in the transaction. One of the worst moves you can make is telling your employees too early.
When making big decisions like this, it’s important to consult your mergers and acquisitions team. Don’t have one? Contact Stony Hill Advisors to speak with an experienced M&A advisor and start building your team today. Let’s work together.