Employee Introduction After Closing
December 05, 2023
by a searcher from Duke University in Tulsa, OK, USA
After a nearly 3 year search and the second time in due diligence it appears I will be closing my first transaction in the next few weeks. Due diligence has been smooth and I am still excited to own the company. The search has been much longer than I anticipated but I was committed to only buying a quality company that had sufficient earnings to replace my corporate earnings without requiring relocation.
I wanted to ask for advice on how to handle the first conversation with the employees when I am introduced. With any company the employees are one of if not the strongest assets you are acquiring so I believe it is one of the most important conversations I will have in my lifetime.
Below is a general outline of what I want to communicate to the employees. My goal being to make the employees as comfortable as possible and eliminate as much fear and anxiety as possible. Most employees are working class with only a high school education and older than me. The worst case scenario would be coming across to them as a young, arrogant, rich, know-it all.
I am partnering with the sellers as they transition to a less active role but the sellers will still be involved. (I'll avoid speaking about ownership but keep saying partnering with the sellers since they will still have a vested interest in the company as long as they have a seller note.)
I'll mention one of the most exciting aspects of the company are the great employees. I'll compliment their commitment to quality and customer service. (Many employees are long tenured and I want to appear humbled and appreciative of their work.)
Emphasize I am not planning any changes to the business.
I was going to touch on my career and family, wife and kids and possibly hobbies. (I want to appear relatable and a real person by mentioning my wife and children)
Tell them I am scheduling one to one meetings with the employees over the next week. (I want to get to know them and them to know me. I want them to be comfortable with the change as much as reasonably possible.)
I welcome any feedback on my outline above and any thoughts people have on sharing their experience being introduced post-acquisition.
from University of Tennessee in Nashville, TN, USA
I would advise you rephrase that you will be the owner, but the current owners are partnering with you for a smooth transition. You didn't buy the business to let someone else call the shots, so the employees need to know definitively who's in charge. The magnitude of how much you change is at your discretion. You need to start with a foundation of trust and, despite what some may advise, it's ok to tell the employees you don't yet have an answer to their specific question. It behooves you to research and respond expeditiously if you do need to provide a follow-up answer. You also need to get assurances from the current owners that they will be communicating employee concerns and redirecting employees to you for issues that require an owner's authorization and/or approval.
Trust in ownership (you) will have to be reestablished, repaired, or created with certain employees. You will learn things about the business in the first week and thereafter that never were discovered in diligence, some good and some not. You face a unique challenge in loyalties with certain employees since the existing owners will still be present post-close. That will take time for some to fully accept and others may never fully accept the change.
The social constructs under the current management will not all remain intact, regardless if your predecessors were departing immediately or not. In past closings, I have seen clean diligence processes lead to closing, only to have employees privately share previously undisclosed internal issues on Day 1. In other instances, individuals that committed to staying long-term post-transition left within the first six months. You won't anticipate every challenge that emerges but prepare yourself mentally and emotionally to have patience and a readiness to problem-solve. Hopefully, there will be few to no major discoveries.
Your messaging is vitally important to earning employees' trust. People don't like surprise changes or the unknowns that come with them. They emotionally crave reassurances of their own security and will create narratives in their heads in the absence of honest and concise communications to answer the unknowns. It's not their fault; it's human nature. Naturally, the narratives that they create will sometimes be overly bleak.
Your outreach will be welcome for some and uncomfortable for others. Don't discount the wallflowers; they may become your biggest assets in the long-run. Likewise, don't assign a premium to the early cheerleaders; they may become your biggest liabilities later. Every individual is unique and you will need time to effectively evaluate your team's dynamics. Always remember that the people on your team will either drive your success or your failure and that it's so much easier to influence with honey rather than vinegar.
To your success!!!
from Arizona State University in Chandler, AZ, USA