One of the best parts about writing a column and books is hearing from you, the reader. So this week I'd like to turn it over to your questions. Please use the comment field below to ask about building a company you could sell or to provide a comment you'd like me to address.
Q: “How and when do I tell my employees that I'm considering selling my business?”
A: I would recommend drawing a distinction between telling your management team and telling the rest of your employees.
In order to minimize an earn-out, you need to present a potential acquirer with a management team (not just you). That way, the acquirer can get comfortable with the team of managers who will be running the business after you leave. Before you start meeting seriously with buyers, you should tell your managers. To get them excited, you can offer them a “success bonus” tied to closing a deal, paid in two instalments: one on the day the deal closes and a second tranche on a future date, provided they are still employed by your company and its new owners.
The rest of your employees, and also your customers, will likely be spooked if you tell them you're considering selling, so I'd suggest you delay telling them as long as possible — ideally, wait until the deal is closed.
What ideas do you have for this business owner grappling with when to tell his employees his business is for sale?
Special to the Globe and Mail
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell. Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's “Who's Who” list as one of America's most influential business-to-business marketers.
