Preparing staff for the sale of your brokerage
There are many things to consider when selling your brokerage. One that often gets missed or placed on the backburner is preparing your staff for the possibility the brokerage may be sold. A failure to proactively manage and communicate this, where feasible, could have long-lasting implications.
So, you’ve decided to sell your brokerage, moving off into the sunset. As we’ve indicated in previous blogs, the process for selling your business can be both complicated and challenging, with many pitfalls along the way. Failing to safeguard your key resources ahead of the sale could be one such pitfall, which could lead to a reduced sale price and additional complications, including increased risk of a negative outcome to one of your most important resources, your staff.
Why you need to consider the impact of selling your brokerage on your staff
Like other elements in the sale process, you’ll also need to prepare well in advance for the potential impact this will have on your team. Your employees are often a critical component of your business and thus are something worth protecting and carefully managing once you make the decision to sell.
As you progress with the sale, identify any problems or concerns your employees might have once the news breaks on your prospective deal. The more thought you put in upfront regarding any potential impact on staff from the sale, the better prepared you’ll be to manage this effectively.
Ask yourself the difficult questions, carefully formulating your position on each. Be prepared to answer any questions or concerns they may have, recognizing their fears will only be magnified given the sensitive nature of this issue; they may also have a myriad of emotions that you’ll need to navigate.
Ideally speaking, you should have a preferred position on the fate of your staff, and whom if any will be retained post-sale. In addition, you may want to set specific parameters for your best and worse case scenarios, and what’s the bare minimum you’d be comfortable with when it comes to employee retention.
What and when to communicate the news to your employees
When it comes to the topic of communicating with your team, there is one key caveat to be aware of ahead of time. If you’re planning on discussing the potential sale of your brokerage only once you’ve received a legitimate offer, realize that you may be limited in what you can tell them and when based on the terms of the NDA (non-disclosure agreement) you’ve signed with the prospective buyer.
So, deciding what to tell them and when may come down to a myriad of factors, including how close you and your team are, if family and friends are part of the mix, the likelihood anyone could lose their job due to the sale, and most importantly your commitment to selling.
If you’re simply in speculation mode and are just casting a wide net, curious as to the potential offers you’ll catch, it’s likely best to say little to your staff ahead of time. If nothing comes of the sale and you go back to ‘business as usual’ rather quickly, you will have stoked the fire for nothing.
Alternatively, if you’re fully committed to selling your business, and the sooner the better, it’s probably best to inform your entire team of this. A deal could come together rather quickly, particularly if you’ve already been shopping the business around, and you wouldn’t want to surprise them with the news you’ve sold the brokerage.
How much you decide to divulge early on will likely be a function of your relationship with your staff, along with your management style and personality. If you have created a close, “family oriented” culture in your business, and have led the company with an emphasis on transparency and openness, communicating the critical elements related to the sale early on will be imperative, especially if you’re hoping to retain these relationships and positions post-sale.
Potential employee questions you could be asked
The following list highlights some of the questions you may receive from staff regarding the sale:
What’s your plan for the staff? Will you expect the buyer to take on the entire team, some or none of us? If it’s some, is there a core group you’re looking to protect? Will you be asking the buyer to protect our jobs for a minimum period of time?
Will our salaries, bonuses, vacation time and other benefits be impacted at all by the sale? If so, to what extent?
Will there be any significant changes in how the brokerage operates after the sale? Will our roles and responsibilities change at all due to the sale?
Are any significant cost-cutting measures expected after the sale, and if so to what degree? Will this negatively impact us or our clients?
Are you planning on staying on in some capacity post-sale to ease the transition to the new management team?
Do you anticipate the buyer will make any major changes once they takeover the brokerage?
Damage Control: How to Deal with Contentious Staff Issues
Now that the news is out you may be selling your brokerage, you may experience added anxiety and stress from your employees. The fear and concerns they’re expressing are real, so it’s important you recognize them as such. Change often leads to a period of stress, with uncertainty derived from an unclear future. This may result in discontent on their part.
This is never a positive outcome, especially when you still have a business to run and clients to service, not to mention when you want to sell. The best thing you can do at this point is to sincerely acknowledge their concerns. Don’t downplay or try to rationalize them, as this won’t help. Instead, try to be as honest and upfront as you can be given the circumstances.
Make a concerted effort to ensure morale isn’t negatively impacted by this situation, as not only could this impact your business and your clients, but it could also negatively impact the sale. You’ve invested a considerable amount of time and money growing your brokerage and building a high-performing team, now is not the time to let this slip.
The connections you’ve fostered with your employees over the years will provide the nudge needed to do right by them, despite the inherent limitations. Be conscious of their value as you commence the selling process; your staff will be grateful and appreciative of the efforts you make to keep them better informed.