It's not uncommon for entrepreneurs to become employees when they sell their company. Elaine Fischer and Stewart Thornhill offer a few tips on what to do before the sale to ensure a happier union.
Common reasons employment agreements break down:
- Not setting a defined time period for the relationship.
- Lack of clarity on who is in charge.
- Difficulty transitioning from role of entrepreneur to role of employee.
- The new owner no longer needs the entrepreneur’s guiding voice.
- Inability to work within new workplace culture.
- Difficulty watching someone else make decisions about ‘your’ business or product.
What to consider before a sale:
- Be clear why you want to stay on. Know your own motives before going any further.
- Consider alternatives: Consultancy could be better, or selling cold and walking away.
- If joining the new team, apply a specific period of time to the new working relationship, subject to renewal. Whether it’s six months or three years, it will help clarify the new structure and reduce ambiguities for other employees.
- Have a frank discussion with the buyer, going through scenarios for possible conflict. Assess whether you can work together.
- Research the acquirer’s work culture: Speak to former employees, other companies that have been acquired, and clients, to get a feel for the new work environment.
Sources: Stewart Thornhill is the executive director of the Pierre L. Morrissette Institute for Entrepreneurship at the Richard Ivey School of Business , and Elaine Fischer is the Anne and Max Tanenbaum chair in entrepreneurship at the Schulich School of Business.
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