Neil Patel

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As I share in my latest book, Selling Your Startup, telling your employees about an acquisition is often something that can evoke a series of emotions.

As the owner of the business, it’s your duty to manage and understand these emotions. That’s how you will reach a successfully completed exit and transition.

Each employee will have a different reaction to the news of an acquisition. And that depends on their relationship with owners and the business as a whole.

In this article, we take a look at the appropriate time to inform staff, as well as methods of doing so.

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    Understanding the emotions and the thought process of employees will put you in the right position to keep everything running smoothly.

    Correcting the confusion and effectively communicating the new move to staff is also something you should certainly consider.

    Remember that mastering the storytelling side and how you are positioning your business is critical when it comes to engaging and speeding up the process. This is done via your acquisition memorandum. This is super important to reach a successful acquisition. For a winning acquisition, memorandum template take a look at the one I recently covered (see it here) or unlock the acquisition memorandum template directly below.


    The Impact Of An Acquisition On Employees

    The news of an acquisition can have a damaging impact on the business. Even if all is done perfectly on the end of the current owners.

    Remember that some of these things are out of your control. But you can take certain steps to mitigate potential damage.

    Here are some of the factors you that should consider:

    Doubts About The Future Of The Company

    Estimates suggest that over 70% of mergers and integrations fail, which will likely be a concerning figure to your current members of staff.

    They may worry about the security of their job. As a consequence, start looking for work elsewhere. This applies to all members of staff, including management.

    A Decrease In Employee Morale

    With the ownership changing soon, employees may start to adopt a ‘What’s the point’ attitude towards everyday work.

    It’s possible that they will no longer try to keep you satisfied, as you will only remain as their boss until the acquisition is finalized.

    This can lead to lower levels of customer service, which can in turn damage the reputation and longevity of your business.

    If your business focuses on production, this rate may dip after the news has been broken. This all comes at the most critical time when your company needs to be performing better than ever.

    For this reason, you need to figure out how and when to tell employees about an acquisition.

    Lower Levels Of Trust

    Being honest throughout the process will help to mitigate this factor, but trust issues from staff are something to consider.

    They may feel like the acquisition has been in the works for longer than they were aware of. Or that the business owners have deceived them

    This lack of trust could cause them to doubt your sincerity and question the devotion they have applied to make your company a success. As well as what they can believe about what is coming next.

    Opening Up To Leaders

    Regardless of whether you have a set of managers, specialist employees, or an entire HR department, being truthful as early as possible is the best approach.

    Remember that other employees will look to their immediate leaders for guidance, reassurance, and possibly even advice during the acquisition.

    • Informing them early enough will allow them to get a better understanding of the situation, which can then be relayed when needed.
    • Here are some possible ways you could inform the leaders and managerial crew within your business:
    • Bring it up during a meeting – At the next managerial meeting, you could bring up that an acquisition is in the works. This should be done at the start of the meeting, to clearly show that it is a pressing issue and one that you wanted to share.
    • Schedule a time slot for each leader – Speaking individually to each manager could add a genuine touch, helping to maintain the trust shared between you and your workforce.
    • Explain the reasoning behind the acquisition – This level of transparency will surely be appreciated by your team.
    • Inform them of the possible upcoming changes – Will anything change with the everyday operations of the business? Convey this in as much detail as possible, while also touching on what is expected from ‘higher level’ employees.

    Make sure the leaders clearly understand the process and what will change (if anything) until the acquisition has been completed.

    Telling company leaders about the upcoming arrangement can also help to negate lower levels of morale, as they will feel valued and in the loop.

    They’ll even assist you with information about how and when to tell employees about an acquisition.

    Brief All Your Employees

    You’ll want to ensure that you brief employees shortly after talking to the managerial team. It won’t take too long for the news to spread in most cases. That’s why it’s essential that employees hear it from you.

    Some companies opt to tell staff via email or letter, but talking to them in person is a sure-fire way of maintaining your reputation and transparency.

    Often, how you handle the acquisition will lay the foundation for the new owners. Being truthful and considerate will help the chances of the employee staying with the company long-term.

    Once the acquisition has been announced, you should also open up the floor to relevant questions. The sorts of queries that you may encounter include:

    • Who are the new owners?
    • Will my working contract remain the same?
    • Will I keep my job?
    • Is my role within the company different now?
    • What experience do the new owners have?

    Obviously, you won’t be able to answer every question, but doing your best will reassure your employees, so that they know exactly where they stand.

    Keep in mind that as the owner, there is only so much you can do in this situation. If you have sufficiently informed the managers, staff can be referred to them for additional questions.

    Employees may also feel more comfortable talking to their department leaders, as their emotions may be similar.

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    What Information To Give To Employees

    The amount of information that you give to employees is crucial for moving forward and making the acquisition a success.

    Here are some of the details you could look to include during the announcement stage:

    • When the deal was finalized and the effective date of the acquisition (When the buyer will receive full ownership of the company).
    • How the acquisition will take place – Such as when the buyer will make an appearance when they will speak to staff etc.
    • Details of the new owners – This could include a bit about their background within the world of business, if appropriate.
    • Any new plans the owners have shared – Bear in mind that you will have to seek their permission before releasing these plans to your employees.
    • Quotes or a short speech from the buyer – This could be a really nice touch and a great way of motivating the existing workforce. Consider reaching out to the buyer and ask them to provide a few words about their aspirations for the business in the future.

    You should also encourage leaders to make themselves available and approachable. Employees will appreciate this gesture and it will lessen the strain on owners throughout the process.

    These strategies are critical to the process of how and when to tell employees about an acquisition.

    Considering how valuable your workforce is for the success of the company, you should know how to position the team in a pitch deck. That’s how you’ll safeguard their interests in the acquisition.

    Dealing With The Emotions Of Employees

    As previously mentioned, staff are likely to feel a variety of emotions after the news of an acquisition has been shared. Everyone is unique and these feelings will differ from person to person, but here are the most common ones, as well as how to successfully manage them:

    Fear Or Uncertainty

    Uncertainty towards future job security is almost always a pressing issue during an acquisition. You can help your employees by offering them a letter of encouragement.

    This is essentially a document containing all the positive things they have done since working for your company.

    A letter of encouragement can be passed across to the new owners, highlighting the efforts of various employees.

    Another method you can implement to reduce fear is by publishing rotas up until the official date of the acquisition.

    This will give your employees peace of mind, knowing that they still have working hours, at least for the foreseeable future.

    Anxiety And Nervousness

    Anxiety is a common emotion that employees may experience during this time. The best way to combat this feeling is by simply keeping staff informed as much as possible.

    Think daily updates, regular meetings or even popping in whenever there are some new developments to share. Keeping your workforce in the loop will ease their nerves considerably.

    Sadness

    Some members of your workforce may feel a sense of sadness, or that an era is ending. This is particularly likely for employees that have either been with you for a long time, or those that are passionate about their job.

    Remind saddened employees that this could be the start of something incredible to come in the future – That it is not the end, but a new opportunity for them.

    Creating excitement is a great way of keeping motivation and morale levels high whilst moving forward.

    Willingness To Adapt

    There’s no denying that some people don’t like change. Whether that be because of something they have experienced in the past, or the thought of a fresh challenge, encouraging them along the way is a great idea.

    If you have availability, why not listen to their dreams and goals for the future? After they’ve told you, they will likely feel more inspired to fulfill their ambitions.

    Keep these factors in mind when working out how and when to tell employees about an acquisition.

    Tips For Informing Your Workforce

    Telling your workforce about the future plans won’t be easy, but being cautious and understanding will have a hugely influential effect. Below are 3 tips that may help you along the way:

    1. Break The News Yourself

    While trusting management with announcements is all well and good, this particular information should come from you personally.

    It will show your workforce that the acquisition is deeply important, while also conveying that you genuinely care.

    Making time within your schedule as early as possible could also be the right route to take.

    Avoid delaying the announcement for too long, in order to keep things stable within the business.

    2. Keep Your Motives Transparent

    Whatever the reason behind the acquisition, being transparent is your best bet. Keeping your motives quiet will only lead to speculation and mistrust from employees, damaging productivity or levels of customer service.

    When it comes to an acquisition, a little honesty can go a long way in terms of relaxing the minds of your workforce.

    3. Plan For The Worst

    Like with most things in the business world, planning for the worst will ensure that you’re covered in all situations.

    Here are some of the things that may happen after the acquisition is officially revealed:

    • Employees may leave after finding work elsewhere, in order to boost their levels of job security.
    • People may get discouraged during this time, making them harder to manage and motivate.
    • Levels of productivity may fall as a result, harming the overall profitability of your business.
    • A negative impact on customer service, potentially harming your reputation and the relationship your company has with regular customers.

    Taking all of these possible scenarios into consideration is a great way of keeping your business in a positive position throughout the acquisition. Take care to avoid possible mistakes during an acquisition.

    To combat employees leaving, be open to employing new staff along the way. Alternatively, give current staff more of an incentive to stay by sharing their rota before the acquisition.

    In regards to the other issues, keeping motivation levels high is key.

    Work on stabilizing the work environment by thoroughly addressing any issues (This can be done either by yourself or with the help of managers).

    Be transparent, communicate positive feedback to staff, and reinstall faith in the company by sharing ambitions for the future.


    You could also reinforce the company motto, making it clear that nothing changes between now and when the acquisition is completed.

    Use these tips for how and when to tell employees about an acquisition and you might make the transition smoother.

    How And When To Inform Your Employees About An Acquisition

    We hope this article has helped you find a way to inform your employees about an acquisition. To summarise the timing of the announcement, the earlier the better is typically the best approach in most cases.

    Though you may also be under the constraints of your legal agreements and may want to ensure you are far enough along in the due diligence process not to be sounding a false alarm.

    Remember to always be honest, keep your team leaders on your side and do everything possible to keep the atmosphere positive in the workplace.

    Your personnel will likely be strained during this time, both with daily operations and their emotions, so offering relevant support is crucial to the success of an acquisition.

    You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

     

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    Neil Patel

    I hope you enjoy reading this blog post.

    If you want me to help you with your fundraising, just book a call.

    Book a Call