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What Percentage Of Employees Leave After A Small Business Has Been Sold?




Comments & Feedback From Pro Intermediaries & Pro Advisors On BizBen:

There is no definitive answer, and many times it's dependent upon how the employees are treated during the sale. Employees leaving and finding other jobs will typically happen while the business is being sold or in escrow, because of perceived uncertainty of employment. Once the business is sold and employees meet the new owner, and assured that they'll keep their jobs, it shouldn't be a problem. The broker and seller should make an effort to keep the sale of the business confidential, but once the business is about to transfer ownership, the seller and future owner should have a meeting with employees and explain that their jobs are secure.

Contributor: Business Broker: Southern California   Comment # 1367
In over 700 transactions, I can count on one hand the number of times we have had problems with employees staying on after the sale. The buyer is always worried about the employees leaving, and in truth, the employees are always worried about being fired and replaced with the buyers family members. Neither happen very often in small business transfers.

That said, everyone needs to do some thinking about how the current ownership treats their employees, the current ownerships management style, and how that might differ from the buyer. The very few times we have had an employee not want to stay on after the sale were directly related to a buyer having a completely different management style then the previous owner.

Another reason why it is in the buyer's best interest to keep the sale confidential ... and require the seller to do so until the buyer wants to be introduced to the employees, which is typically just before the closing, maybe a day or two before.

Almost always the buyer is purchasing all of the assets out of the seller's corporation or LLC and setting up a new entity. So, in effect, all the employees are "fired" one minute and "re-hired" by the new owner the next minute. If employees have known about the sale in advance, the buyer has no idea if one or more has been looking for another job and might leave shortly after the closing. When it is presented to them as a fait accompli, they are far more likely to give the new owner a chance.

The new owner needs to treat the employees with respect and assure them that their jobs are secure, and
can also provide incentives, e.g., a bonus if they stay for six months or a year.


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