We are in the 11th hour of purchasing a small business. Throughout the due diligence process the seller has been hyper-paranoid about his employees (whom are in their 60s and 70s) catching wind of the sale, so we have had to access the property only after business hours. Even after the Purchase Agreement has been signed he is STILL very squirrely about his employees finding out. (1) is this normal? (2) any obvious red flags?
Note: seller is hands-off and remote. Employees operate the day-to-day.
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.