In a previous blog post, we highlighted the primacy of talent in the Media & Technology sector. Retaining your talent, particularly before and immediately after a sale, is key. So when is the best time to tell them about an deal – before, during or after?
Well, it depends
Some deals are done so quickly (eg, Facebook agreeing to buy Instagram over a weekend) that telling staff before a public announcement becomes rather a moot point. Other businesses, particularly start-ups, can foster such an open culture that hiding a potential deal would be seen as deceitful.
The most important thing is to get staff buy-in by managing the communication well. You may find a significant portion of your deal proceeds are tied up through an earn-out or other transaction structure – you’ll need your staff to help you deliver this, so alienating them could be very costly.
As a rule of thumb, wait as long as you can
Experience tells us that sharing the news just before or just after signing is often the least risky approach so that you can deliver a ‘fait accompli’. If this is not possible, informing selected senior staff on a need-to-know basis can also be a sensible middle-ground.
Here are a few simple things to consider:
- The more people that you tell, the greater the chance of a leak to other staff and customers – this can sow confusion and turn a well-planned communication strategy into a rushed and reactive one;
- The prospect of a sale always proves to be a distraction for everyone who knows – even for those not involved in the negotiations and integration planning, uncertainty and concerns over job security (even if unfounded) are difficult to quell;
- This loss of focus can impact trading performance – you don’t want to be missing financial targets mid-way through due diligence;
- Suspicions may be raised by the due diligence process – seeing a number of ‘suits’ in the office outside the normal audit period may raise questions and your ingenious cover story might start to wear thin;
- Necessity may force your hand – key finance staff will frequently need to be brought into the loop to answer queries during diligence;
- It is often difficult to communicate the message face-to-face to all staff at the same time – holidays, sick days, working away from the office, multiple offices (particularly internationally), etc, can pose logistical challenges;
- It ain’t over until the fat lady sings – telling staff early leaves you open to managing staff disappointment and low morale if the sale falls through.
Ultimately, however, these are your staff and you will know them best. It is your relationship with them that will be affected, either positively or negatively, by a sale and its communication. You need to be comfortable in your own mind with when to tell them.
And one last thing…
Be careful with email. Once an acquisition is complete, a purchaser will be able to access all your company emails. This includes those sent and received during the sale process. Aggressive, derogatory or insulting emails may return to haunt you. So as you type your next email, remember your future boss (or a regulator) could soon be reading it!