Every employee plays a key role in keeping your business running successfully. When you are considering selling your business, one of the smartest moves you can make is preparing and keeping employees actively involved in the company even when you are no longer in charge.
When potential buyers are looking at each aspect of your business, a key component they are looking for is employee retention. If many employees will likely leave the company after it’s sold, that decreases the value of your business in the eyes of buyers. The more your staff remains involved with the company after you have left, the better opportunity your successor has for success. When preparing to sell your business, it’s crucial that you prepare your employees for your exit and it’s common to implement employee incentives in one’s succession strategy.
Identifying Key Employees
Whether an employee is a valued part of your management team, or a line worker with a specific area of expertise, there are key people in every department of your company. Your current employees can be invaluable and the sooner you recognize them, the better you prepare them for the upcoming sale and prepare them to work with the new management team. Here are some of the factors to identify internally before beginning the negotiations of selling your business:
- New Management Team’s Needs — often when a company changes management, there are certain people who will take over key roles in the new organization. Before you begin offering incentives to key employees, make sure you know whether or not the new management team has a replacement in mind. Knowing the difference between who is key to you and who is key to the new manager is important.
- Your Staff Member’s Needs — keep in mind, not all staff members will be comfortable working through a transition to a new owner, nor may all of them wish to stay. In competitive job markets, the key to employee retention is making sure you understand the needs of your employees and what competitors may offer them as well. The age of the employee, dependent status, and other factors may play a role in determining which staff members wish to remain with the new owners after you exit the business.
- Business’ Needs — perhaps the most important factor in determining key employees is business’ needs and which employees are critical assets in meeting those needs. Certain talent contributes to the value of your business. These are the employees whom you must ensure have a place within the new company to maintain its greatest value in the eyes of a potential buyer.
Working With New Owners to Retain Needed Employees
There are many ways to keep employees happy when transitioning from one leadership team to another. One of the most important ways to make sure your employees feel comfortable and valued is to make sure you are keeping communication lines open during the succession stage. Although you don’t need to discuss the details of the sale, reassuring your employees about the transition from one ownership team to the next can help them feel more confident that they will have a good working environment moving forward. No one wants to remain in a position where they feel they are underappreciated or worried about job security.
When speaking with potential new owners, one of the most important things you can do is make sure they understand the value your employees bring to the business. Regardless of what each employee’s role is, detailed information about each of their strengths and how they contribute to the overall success of the business will be invaluable to the new owner.
The new owners of your company have a vested interest in keeping your current employee base. The cost of training new employees can be significant. You should consult with the new management team about incentivizing key employees to ensure high retention rates. Whether this is providing a new contract with improved terms or offering financial incentives for increased sales or production.
If you are considering selling your business or are concerned about retention strategies, set up a time to talk with our team of Certified Exit Planning Advisors. Contact Prometis Partners today.