How to ensure loyal, valuable, hardworking employees get a fair shake when you’re gone.
When Dan Vuksanovich sold his IT business, he wanted to do right by an up-and-coming employee.
“He was still a bit green. I was still training him when I decided to sell the company,” recalls Vuksanovich, now doing business as the Website Traffic Increaser Guy. “I wanted to make sure that Simon would have a chance to prove himself to the owner of the firm that bought mine.”
Many small business owners are faced with the same dilemma. Eager to sell and move on to something new, they are equally concerned about the future well-being of the staff members who have driven their success. Here’s how to balance that equation.
- Agree in fact, and in spirit.
Vuksanovich got a written guarantee that his employee could stay on. At the same time, he was convinced of the buyer’s good intent. “I made sure that the purchase agreement contained a section stating that Simon would have a job for a minimum of 90 days with the new firm,” he says. “The agreement itself was less important to me than the buyer’s willingness to include it, and I was willing to kill the deal if the buyer showed any sign at all that he would not take care of my employee.”
RELATED: Professionals You Should Hire When Selling Your Business
- Be flexible.
When Edward Hechter sold his party-supply company, PartyPail, last year to manufacturer Hoffmaster Group, his 30-person company was absorbed into a 1,500-person organization. Because it was inevitable that some jobs would become redundant, Hechter gave a lot of leeway to displaced employees to ensure they could transition smoothly to whatever would come next. “For employees whose jobs were eliminated, we worked with them to offer flexible work schedules so that they could interview with new employers and start their new jobs while working evenings or weekends with us to help us wrap up our business,” he says. As a result, “we didn’t have anyone just leave, and our staffing schedules ran smoothly during the transition and shut down of the facility.”
RELATED: Keys to a Good Flex-Time Policy
- Build a reserve.
Some buyers will agree to keep on employees after a sale, but many more will want to build up the rolls with people of their own choosing. If the buyer won’t guarantee a spot, at least the business owner can promise a soft landing, says management consultant Kathleen Brush. The owner can promise to pay employees some amount of money, should they be let go from the company within a certain number of months after the sale. The owner will need to set aside the cash as a just-in-case fund, but the effort can help ensure loyal employees are taken care of.
RELATED: 3 Reasons to Have a Cash Cushion
- Give a helping hand.
When employees leave a firm during a sale, either by their own or the buyer’s choosing, the business owner can smooth the transition with a number of practical pieces of assistance, says Barrie Gross, founder of Barrie Gross Consulting in San Francisco. The business owner may offer outplacement services or bring in a job coach. A less expensive gesture, and one that carries some weight, is simply a positive reference for the employee to take to the job market.
RELATED: End-of-Employment Checklist
- Sell on the upswing.
The best means to ensure a place for your people in the new organization is to demonstrate their value. One way to do that is to time a sale for when business is growing. “Sell your company when it is exhibiting growing forecasts,” says Lynda Zugec, managing director of The Workforce Consultants. “Buyers know that your employees have solid relationships with customers and suppliers that are vital to ongoing success. Buyers are also aware that employees know the industry, have an understanding of the strengths and weaknesses of competitors, and possess valued experience.” If the business is expanding, a savvy buyer will recognize the assets that present employees bring to the table.
Watch 7 Myths About Selling Your Business, a free small-business webinar