What percentage of employees normally leave when a new buyer takes over a business he has just bought?
I recently had a business opportunity for sale, and the seller was proud that he had a key employee who did most of the technical work of the business, and that the owner needed only to manage at a high level, doing some marketing, maintaining customer/vendor relationships and so forth. Most of the technical aspects of the business and day to day operations, were handled by a very competent and high quality employee.The seller saw this fact as a positive, and thought it justified a higher selling price for his business. However, the buyer saw this as a negative, and thought it justified a serious price discount, because if the employee left, not only would the businesses profitability be seriously impacted, the workload of the new owner would increase several fold, until a replacement could be found, if in fact a replacement could be found at all.
The buyer claimed that, in all the business transactions he had been involved in, almost always all key employees left shortly after the business sale was complete, and he always based his business buying decisions on the idea that all key employees leave. Most high level, high value employees probably have one or more standing offers from a competitor, vendor or customer that saw the high value they provide and tried to lure them away. Most of these employees are staying out of some sense of loyalty to the current owner and once that changes, they take one of the standing offers they have for more money, better benefits, favorable location or what have you.
In my experience, most employees usually stay, after a new buyer takes over, but my experience isn't vast enough to justify a large enough sample to make it statistically viable, so I ask you, the business buying and selling community, in your experience, do the majority of employees stay or leave when a buyer takes over a new business? What are some methods a buyer can use to gauge whether employees will stay or not?
I would like to hear from you in a comment above - please feel free to reply to my comment as well. Thanks!