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

Comments & Replies: 4     Views: 3852     Posted By: Rob Hartman  Rob Hartman, Business Broker, SF Bay Area



Topics: Buying A Business, Escrow Closing Issues, Selling A Business     Tags: buying a business, for sale by owner, selling a business



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.


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.

Contributor: Business Broker: Southern California

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.


  Helpful Resources To Assist In Selling And Buying California Businesses
Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.


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