I'm in the early stages of selling my 12-person service business. Broker says we shouldn't tell employees until the deal is basically signed. That feels wrong but I also don't want to spook everyone and lose my best people before closing. Anyone been through this? How did you handle it?
Confidentiality
Keeping employees in the dark during a private sale
Keeping them in the dark is standard for a reason. The moment word gets out, you risk people updating resumes or clients hearing rumors. I sold a small logistics company last year and only told staff after the LOI was signed and due diligence was almost done.
What happens when your key person finds out from someone else? That's my fear
I've seen it backfire. Owner kept everyone quiet, but the buyer's team toured the office and a receptionist figured it out. Two senior people left within a month. If you're going to keep secrets, you need a plan for leaks.
That's exactly what I'm worried about. The buyer wants to walk through the shop floor next week. How do I explain that without raising flags?
Call it a potential investor or a safety audit. Something boring.
Honestly I think the whole 'keep it secret' thing is overblown. I told my team early when I sold my landscaping company. Yes, a couple got nervous, but the ones who stayed were the ones I wanted anyway. Transparency worked for me.
That's a luxury you have when your employees aren't easily replaced. For a 12-person service business, one or two key techs leaving co uld crater the deal.
How long is the gap between now and close? If it's three months, different story than a year.
Probably 4-6 months. Broker thinks we could sign an LOI in a few weeks.
4-6 months is a long time to keep a lid on it. If you have a manager you trust, consider bringing them in under an NDA. Gives you an ally on the floor.
An NDA on an employee is only as good as your rellationship with them. If they feel betrayed later, that piece of paper won't save you.
To me the real question is what you owe them. Legally, probably nothing until close. Ethically? Different answer for everyone.
I'd also think about retention bonuses. Even a small one tied to staying through close can calm nerves if the news leaks. Doesn't have to be huge.
Agree on retention. But don't announce bonuses out of nowhere either, that spooks people just as fast.
Every deal is different. You know your people better than any broker does. If you think they'd handle it, maybe test the waters with one trusted person first.