How do you communicate effectively when selling a business?

When and how should staff be informed?

A company transfer is always a source of stress and sometimes conflict. For customers, suppliers and, above all, staff, it’s an unknown. Who is going to take over the company? What will change? What will happen to them?

Uncertainty leads to all sorts of rumours. You hear one thing, you make up the rest. And we often imagine something much worse than the reality. The unpredictable reactions of certain members of staff can follow on from one another and seriously damage the company (see box).

So how can we prevent legitimate questions turning into a disaster scenario? How can you communicate effectively with company staff during the delicate transfer process?

Here are a few tips:

1.Discretion. This is the golden rule for any transfer operation. The best way to avoid miscommunication is to avoid having to communicate at all. Access to information must therefore be strictly limited to those directly involved in the sale process. This also applies internally, as this is often the source of leaks.

2.Confidentiality undertaking. This is the embodiment of the duty of discretion. Ask those who are aware of the sale to commit by a written undertaking. The firm in charge of the deal will have to get each prospective buyer to sign this undertaking before sending them the presentation file. If they are not interested, the documents sent must be returned.

3.Communicate together. If the buyer’s message is different from the seller’s, there will be increased anxiety. The ideal solution is therefore to communicate together, in a concerted and considered manner. This can only be done when there is complete and definitive agreement on all the terms of the sale.

4.Don’t communicate too soon. This is the most common trap. To put down rumours, staff are told that the company will be sold in the more or less near future. You want to be transparent, but you’re doing worse than good, because you obviously won’t be able to give precise answers to the questions that will be asked. If the communication is made too early, it will cause even more anxiety when the process is prolonged. And no one can say exactly how long the transfer will last.

5.Don’t communicate too late. Some key people may become discouraged if they realize that they are being kept in the dark. For the buyer, it is important to keep them on board. As an exception to the previous point, it may therefore be a good idea to involve these people discreetly and at the end of the process.

6.Diplomacy. The way you communicate is also important. Communication is not a monologue. Listening to concerns and responding to them are the ingredients of successful communication.

It’s not easy to communicate well during a business transfer.  Yet this is a crucial stage in the company’s future. Staff often have a hard time dealing with the uncertainty that comes with change, especially if it is prolonged. While it is legitimate to inform everyone, it must be done wisely, in a considered and concerted manner, and in a spirit of dialogue. Discretion should therefore be favoured wherever possible.

Case study – the (almost) disaster scenario :

It’s not uncommon for the atmosphere in a company to gradually deteriorate as a result of careless communication.

In order to put down persistent and unfounded rumours, the manager calls a meeting of staff and informs them that the company is to be sold. The buyer, a company manager, was introduced. Supported by the managing shareholder, he was appreciated by some colleagues and envied by others. Weeks went by. After several unsuccessful attempts, it became clear that the buyer would not be granted bank credit. The search for potential buyers was relaunched. Several people left the company for the competition, causing distress among colleagues and customers. The union asked for a meeting of the works council, but there was nothing to report. Strike action was threatened. Worried suppliers tightened payment terms. Bankers risk withdrawing their confidence. Fortunately, a buyer was found “at the last minute” and quickly took over.

Failure to manage this situation could have plunged the company into a serious and irreversible crisis.

Tanguy della Faille – FAMILY BUSINESS TRANSMISSION – tanguy.della.faille@fb-transmission.com