Have helped many sellers transact their business - maintaining confidentiality through the sale process is critical, typically this is the #1 concern from a seller’s perspective. It is normal for employees to be notified of a sale after a deal closes. Sharing the seller’s perspective for some context. If employees learn an owner is exploring a sale…they may consider finding new jobs, demanding incentive $ to stay through a transition, customers could get spooked, it can be difficult to win new business, etc. There are many valid reasons for why an owner wants to keep a sale confidential.

In my experience, smart employees view new ownership of a business as an opportunity. A new owner (buyer) is obviously excited about the business and brings a mix of new ideas, energy, and resources to a business to grow it. Growth = opportunity for all. As the new owner, you want to see the business continue to flourish and grow…translating to a bigger, more profitable business.

This is very normal. The employees should not know that the business ownership has changed hands until after the transaction. The caveat here is if there is a key employee that you absolutely need in order to continue operating the business. This would be someone like a long-term general manager that knows all of the clients, employees and could really hurt the business if they were to leave.

Pretty normal.

As other have said. Very normal. It can only add complications to the process, and even more so if everything doesn’t move forward.

Although if you wanted some employee feedback pre-close, the owner can always do a “blind survey” and you can ask some basic questions but you won’t know exactly who said what.

Good luck!

Have mine for sale and wouldn’t be discussing anything with my employees until after it is sold and they take possession. Why would I when isn’t their business yet. On a good note, spoke with a potential buyer yesterday.

From my understanding it is normal. What if you backed out and the employees found out that their owner wants to sell? What if they get paranoid about how things will change before they meet you? What if they tell all of the customers? What if they leave and steal the customers before the closing?

They will find out when the deal is closed.

Part of your due diligence should have been to interview each employee. To reassure them you plan on keeping them and for you to get an idea on if you even want them to stay.

When we went through the sale process, the offer was changed to incentives for retention of employees for a period of time. If key employees stayed for 6+ months they would get bonuses and owner got a higher percentage of valuation. Just a thought.

This is a big red flag for me. Unless you have a plan to operate the business when all new employees, it could be a big problem. Perhaps they are all planning to retire shortly, and that’s why he is selling? How can you buy a business that is to be operated by people who have not even met, let alone interviewed? If a purchase agreement has been signed, then all the more reason why you should be able to interview them. If it isn’t already too late.

I went through the exact same situation. Imo, somewhat of a red flag.

In my situation, the seller had 2 sets of books and withheld other critical info that his staff was aware of. His staff hated him, despite he never came to work during the day.

When the sale was completed, he called a quick meeting and introduced me as an “investor/partner”. I pulled him aside and said WTF?! The seller was committed to a 2 week/80 hour transition. That same day was his last day.

I would ask your seller, literally, “why is this a secret to your staff?”

You can throw the seller a curve ball and require a staff meeting between you and his staff. (he can intro you as potential investor. If the sale goes through, you simply stated your investment became 100%).

I’d want to read the staff’s body language, ask a few what they do, what they like about it, what they’d change.

Sounds like a ridiculously crazy approach but if the seller has nothing to hide and wants to get out, he may go for it.

Totally normal, if you flake on the purchase it could ruin his business as now all trust is gone between him and his employees. M&A is always secret until the deal is announced publicallym

This is absolutely normal. The logic here is that if the staff finds out, they might try to leave and it also increases the rumor mill between employees. They don’t need to know until its done.

Even when I bought a business, I sat *every* single employee down and told them we wanted to keep then.

I was a DJ at a popular restaurant/bar that was secretly sold. The previous owner still owns the property but had sold the business. The new family came in and the dad was introduced as the new “manager.” We all got to know him before figuring out the business had been sold. I think everyone stayed.

I wouldn’t disclose to my employees that I was selling my business. A deals not done until it’s done. Also, why cause more chaos?

That is the norm.

Normal. I’ve bought and sold many businesses. This is typical. I would at least require access to one senior person, though.