Day 23

It’s a team game!

Unless your buyer is planning to get rid of your staff and absorb your sales into their existing operations, the quality of your employees will be important to them. To be honest, even if this is the buyer’s plan, it’s unlikely that all staff would go immediately; certainly key employees and several of the senior management team would be asked to stay on, even if only for a short period, to ensure a seamless transition.

For this reason, it’s important to make sure you’ve built a great team around you who can continue to run the business effectively, after the shareholders (including you) have gone. If a buyer believes that everything will ‘fall apart’ once the current owners have departed then they’ll be really concerned; this is one of the reasons that exiting owners are often asked to stay on after the sale. But if you’ve created a fantastic team around you who run the business regardless of whether you’re there or not, this won’t be an issue.

So, think about your management team – in fact, think about all your staff. How attractive are their skillsets and knowledge to a buyer? What’s your staff turnover rate? If it’s above the sector average, that will worry a buyer, so aim to reduce it. High absenteeism rates will also be a cause for concern, so think about how you can impact positively on that, too. How productive are your employees? How motivated are they? Could you lock key employees in with share options or other incentives, helping guarantee that they’ll remain loyal to the business and giving peace of mind to the buyer that they’re here to stay?

While we’re on the subject of employees, a buyer would want to see your organisation chart showing reporting relationships, job titles and job descriptions. And they’ll want to see contracts of employment. Ideally, you’d have a formal appraisal process in place too. During due diligence buyers pay particular attention to these issues, so start now and get all of these in place.