The greatest asset of many businesses is their employees. Maintaining the retention of existing employees is a top concern for both Buyers and Sellers when a business is for sale. Here are 2 key things you need to do before you sell your business to help ease future pain points:
1. Get your employment contracts in writing
This is super important, especially for key employees. For example, what happens if your General Manager walks out the door the day the buyer takes over your business? These are things going through the mind of the buyer when underwriting your business. If possible, have these key employees sign multi-year contracts to reduce the risk of them leaving anytime soon.
While important for key employees and/or your management team, getting long-term contracts in-place for entry-level employees is less important. What is important, however, is making sure all these employees understand their compensation package and possible future raises.
2. Ensure you have no outstanding employee liabilities
This could be an employee with 30 weeks of banked vacation or a fired employee that was never terminated properly.
Even more seriously, make sure there are no unaddressed HR complaints in your business. In an unfortunate case, we witnessed a business buyer who had to completely re-brand the business they bought, only 4- months after purchasing it. What happened? The previous owner failed to disclose a series of serious allegations against one of the company's senior managers. When the complaints were made public (after the transaction had already closed), it was the Buyer left to clean up the mess.
Your employees are essential to the successful transfer of the ownership of your business to a Buyer. Want to make the process as smooth as possible? Make sure all your employment contracts are in writing and you have no pending employee liabilities.
Want to learn more about selling your business? Join our online Community and get a free copy of our Urgent Exit Plan Playbook here.