Selling a Business? When to Share with Friends and Family

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Written by Dr. Nolan Duck

Dr. Nolan Duck is a Board Certified Broker with the Texas Association of Business Brokers (TABB) and a licensed Commercial Real Estate Broker with the Texas Real Estate Commission. Nolan is also a Certified Value Builder, Certified Exit Planning Advisor and member of the Alliance of Merger & Acquisition Advisors. As a business coach, author and public speaker, Nolan enjoys sharing advice and consulting with business owners seeking to grow, expand or exit.

Experts predict that 2022 will be a great year to sell a business, and maybe you’re considering it. You’ve researched business brokers, run some numbers, and are ready to start the process. Whether you’re planning to retire, moving on to another venture, feeling like circumstances are right for you to sell to a competitor, or whatever other reason you’ve made the decision, one thing you haven’t done yet is discuss it with anyone. Selling your business can be complex and you’re probably looking for someone (or ones) to bounce ideas off of and get input from. Unfortunately, those business-selling complexities start with figuring out who to tell at what point in the process. While you may be excited about the prospect of your new ventures or looking for wise counsel on how to sell your business and people to weigh in, consider holding back on the impulse to start talking to your friends, family, and anyone involved in your business right away. Breaking the news to too many people too early can cause panic and confusion—but waiting too long can be a deal killer! Let’s break down who to tell and when—starting with your advisory team. 

Advisory Team

You may be thinking, “Advisory team? What advisory team?” Great question! That would be the team you’re about to put together and that will be with you every step of the way. They’re also the first group of people you’ll talk to about how and when to sell your business. These are the decision-makers and experts who are going to advise you on the practical, legal, and financial aspects of selling your company and include your CPA, transactional attorney, financial advisor, and professional business broker. A strong advisory team can save you a lot of money in tax liabilities and other expenses as you go through the process. This team will stay together throughout the whole transaction and will need to communicate and work together well to ensure transparency and a smooth journey.

So, you’ve got your advisory team pulled together and informed. What comes next? Next up is the group of people you need to tell before you bring your business to market—the Ownership Team. 

Ownership Team

You must inform all members of the ownership team before you put your business on the market. That’s your legal obligation. The minority owners will need to figure out what they’re going to do with their shares of the business. Ideally, the ownership team will be on the same page as you and there won’t be any conflict. By talking to your ownership team early and having a good plan, you can avoid misunderstandings as well as deals that fall apart at the last minute. These conversations are even more important if you have a family-owned business.

Advisory team? Already working hard to get you the best deal. Ownership team? On board and ready to go. Is it time to make the big announcement to your staff, friends, and family? Maybe not just yet. The inclination to keep your staff in the loop is admirable, but may not be best for you or them. 

Employees

Your employees may be less excited about the prospect of selling your business than you are. The idea of a new owner may cause unnecessary stress and/or a mass exodus from your company as uncertainty sinks in. The best time (for you and them) to tell your employees is after the sale takes place and you’ve had a chance to talk about the transition with the new owner. If at all possible, try to release the news to your staff in collaboration with the new owner with at least a sketch of a timeline and transition plan. The more you can assuage the fear of your employees with your confidence in the new owner and give them a sense of what’s happening, the less traumatized they may be by the sale.   

It’s understandable you’re excited about the prospects of your new future but, other than the people mentioned above and a few select family members who need to know, it’s best to keep the news quiet. It’s also best to ensure that everyone you do include signs a non-disclosure or confidentiality agreement. This type of legally binding protection covers your interests if vital information is leaked before you’re ready. Selling your business can be complicated, but your communication chain doesn’t have to be! Keeping all the right people informed at the right times can make all the difference.

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