Selling a business is often talked about in stages and numbers; valuations, offers. Heads of Terms. due diligence, and then the completion itself. But behind the figures, documents and detail is something just as important – the people who helped build the business in the first place.
For employees, finding out that the company they work for is being sold can create immediate uncertainty. Will I still have a job? Will my role change? Who will I report to? Will I have to work somewhere different? For the owner, those questions arrive during what is already one of the busiest and often most emotional periods in the life of a business.
Getting the people side of a sale right isn’t simply about keeping employees happy. Strong HR processes can give buyers greater confidence, help due diligence run more smoothly, protect productivity and reduce the risk of key employees leaving at exactly the wrong time.
To explore what business owners should be thinking about, Business Partnership had the pleasure of chatting with Fiona McKee, founder of The HR Practice, about the people side of selling a business. Fiona brings a wealth of HR and M&A experience, having previously worked as a Global HR Director. She founded The HR Practice five and a half years ago, initially specialising in merger and acquisition integration and helping businesses bring together their cultures, policies and processes following an acquisition.
When preparing a business for sale, there is plenty to think about before employees are even aware that a sale is being considered. Financial performance, customers and profitability will naturally be high on the list, but Fiona highlights another area that should not be overlooked; how well the people side of the business is managed.
From an HR perspective, getting the basics right can make a real difference when a buyer begins looking more closely at the business. Are employment contracts in place and up to date? Is the employee handbook accurate? Are HR processes documented? Is performance being managed effectively? These may feel like everyday operational details, but together they can give a buyer a much clearer picture of how well the business is run.
As Fiona explains, “If you’ve got robust processes in place… you’ll be a more attractive business to a buyer“.
When those foundations aren’t there, the opposite can happen. Fiona describes businesses without proper processes as sometimes feeling a little like the “Wild West” – which can leave a buyer wondering what else they might uncover.
That’s why Fiona recommends considering an HR audit ahead of a sale. It can identify gaps early, giving the owner time to address them before they become questions during due diligence. Missing contracts, outdated documentation or poorly established processes might feel relatively minor during the everyday running of a business, but they can take on much greater significance when a buyer and their advisers begin looking closely.
Unresolved employment risks could even result in a seller being asked to provide indemnities against issues arising in the future. Fiona’s point is that some of these problems are relatively straightforward to address when they’re identified early. After spending years building a valuable business, the last thing you want is for avoidable HR gaps to create uncertainty at the point you’re trying to sell it.
Good HR preparation isn’t just good housekeeping. It can help give a buyer confidence that they’re acquiring a well-managed business.
For many business owners, this can be one of the hardest parts of the sale.
There will often be stages where the transaction needs to remain confidential and only a small number of people can know what is happening. But once the time is right to tell employees, how the news is communicated matters just as much as when.
Fiona believes the current owner should play a visible role in that conversation. Employees know and trust the person who has led the business, so hearing directly from them can provide reassurance at a time of significant change. It’s important that employees understand the rationale for the sale. Why have you decided to sell? Why was this particular buyer chosen? What could the next chapter look like?
The acquiring business is likely to have similar values and culture and its scale could provide broader development and career opportunities for employees. Sharing this wider perspective can help employees understand the rationale behind the decision and reduce the likelihood of assumptions being made.
Communication should not end with the initial announcement either. Employees are likely to have questions and concerns as they process what the sale could mean for them. As Fiona explains, when there is a gap in communication, people naturally fill that gap themselves, often with rumours.
That is why clear, consistent communication throughout the transition is so important.
Once employees hear that the business is being sold, their first thoughts are likely to be personal…
“What does this mean for me?“
Will I still have a job? Will my role change? Will I have a new manager? Will I still work in the same location? If I work from home now, could that change?
These are the kinds of questions Fiona says business owners should try to think through before the announcement is made. The more clarity you can provide from the beginning, the less room there is for uncertainty to grow.
Where a new line manager is going to be introduced, they should also be prepared for that conversation. Having them visible and available to speak with employees can help begin building trust with the people they will be working with.
An independent HR consultant can be valuable here too. Employees may have concerns they do not feel comfortable raising directly with the current or new owner. Giving them the opportunity to have those conversations can help identify worries early and create a clearer picture of what support the team needs during the transition.
Ultimately, employees want to understand where they fit into the future of the business. The more answers you can give them, the easier it becomes for everyone to focus on what comes next.
In all businesses there are key people that need to be retained to ensure continued success. They might hold key customer relationships, have specialist knowledge, understand important processes or play a central role within the team. Keeping those people engaged throughout the transition is therefore key for both the seller and the buyer.
Retention bonuses or other incentives can sometimes be considered, but Fiona believes there is an important question to answer first…
“Who are the genuinely key people in the business?“
It is easy for an owner to assume they already know the answer, but Fiona explains that understanding the relationships and dynamics within the wider team can reveal a different picture. The people considered most senior are not always the people who will be most important to the business moving forward.
Any retention arrangements should therefore be carefully considered and focused on the people who genuinely matter to the future of the business. Keeping those employees informed, valued and engaged can help protect the knowledge and relationships a buyer is expecting to inherit.
Naturally, you want employees to feel reassured about the sale and what comes next. But Fiona warns against trying to make everything sound perfect, noting “Be positive about the future, but be realistic too”.
“Employees know the business and they know you. If the message suddenly feels overly polished or promises that everything will be wonderful, it can create more doubt rather than reassurance.”
Consistency is just as important. The message shared with the wider team should match the conversations happening individually. Telling employees one thing together and something completely different behind closed doors can quickly damage trust.
You do not need to have every answer. Be open about what you know, what you do not know yet and what employees can expect to hear more about as the integration progresses. Reassurance comes from honest communication, not unrealistic promises.
Depending on the structure of the sale, TUPE may also need to be considered. TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations, is designed to protect employees when a business or part of a business transfers to a new employer.
For a seller, the important thing is to understand early on whether TUPE applies and what that means for your employees. Depending on the circumstances, there may be requirements around informing and consulting with the team.
Even changes that might seem relatively small can matter. Fiona gives the example of changing an employee’s pay date, which could require consultation as part of the process. You do not need to become an employment law expert just because you are selling your business. What matters is getting the right HR and legal advice early enough to understand your responsibilities and plan for them properly.
The earlier you know what is required, the easier it is to make it part of the sale process rather than dealing with it at the last minute.
After months of preparing, negotiating and working towards completion, it can be tempting to feel like your part is finished once the deal is agreed. But for your employees, this may be when they need you most.
When asked for the single biggest piece of advice she would give a business owner going through a sale, Fiona’s answer was simple…
“Be present”
Be visible, listen to concerns and give people the opportunity to ask questions. Fiona also recommends working with an HR consultant who can provide additional support and give employees another person to speak to throughout the transition.
It is also important to work with the new owner rather than against them. You chose that buyer for a reason, so helping them build relationships with the team can make the transition smoother for everyone.
Selling your business might mark the end of your chapter as the owner, but for your employees, it is the beginning of a new one. How you support them through that change can make a lasting difference.
A successful business sale is about more than reaching the right valuation and finding the right buyer.
The people within the business can be a huge part of what makes it valuable. Their knowledge, experience, customer relationships and understanding of how the business operates do not simply disappear when ownership changes. Thinking about HR early can help identify potential issues before due diligence, give a buyer greater confidence and make the eventual transition easier for the people involved.
Then, when the time comes to communicate the sale, being visible, consistent and open with employees can help protect the team and the business you have spent years building. For Fiona, the people side of a sale should not be an afterthought. It should be considered alongside every other part of preparing a business for its next chapter.
At Business Partnership, we help business owners prepare for sale and navigate the process from the early stages through to completion. Working alongside specialists such as Fiona McKee at The HR Practice can also help ensure the people side of that journey receives the attention it deserves.
Get in touch and we’ll talk it through.
Our thanks to Fiona McKee for sharing her time and experience for this insight.
Fiona is the founder of The HR Practice, a Glasgow-based HR consultancy working with SMEs and entrepreneurial businesses across Scotland and the UK. A Chartered Member of the CIPD and formerly Global HR Director for a multinational services and technology business, Fiona set up The HR Practice with a particular focus on mergers and acquisitions, helping businesses bring together cultures, policies and processes following a deal.
The HR Practice provides retained and project-based HR support, including HR audits, employment contracts and handbooks, performance and absence management, restructures and TUPE, and M&A integration. If you’re preparing your business for sale and want to make sure the people side is in good order, you can find out more at thehrpractice.co.uk.
The views expressed are Fiona’s own and are provided for general guidance. Business owners should take specific HR and legal advice on their own circumstances.
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.