Employee transition and Day 1 readiness questions

July 20, 2025

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in San Francisco, CA, USA

Hi everyone! I have a signed LOI for a small business in the Seattle metro area (~$1M revenue, asset purchase, my first acquisition). Planning to close in late September. Have a few questions that I would love your opinion on: 1 - There are currently 3 employees in addition to the owner and her husband. One employee has been with the company for 20 years (original owner + current owner). What do you think about stay/retention bonuses, and what % do you recommend? 2 - When is the right time to tell the employees? From my POV, the current owners should talk to them first and then a meeting with all of us. The current owner has owned the company for 15 years. I would love to hear what others have done. 3 - Day 1 operational readiness - What surprised you that you wish you'd planned for? (Keys, passwords, bank access, etc.) Would love to hear about others' experiences and any challenges you may have had during the transition. Thank you!!

Reply by a searcher
from The University of Chicago in Nashville, TN, USA

1. I would ask the owner what they think is reasonable, both for length and amount. They will know the employee better than you. If the Seller is offering the key employee any type of bonus with the sale you may also be able to have them make it contingent on them still being there in 6 or 12 months. 2. Many Sellers will want to wait until everything is final so it may be on your first day after close. Even if you do get the chance to meet them I would want it less than 2 weeks out since it may spook employees if closing gets delayed and it could disrupt business. 3. If you are doing an asset sale, plan on spending the first couple weeks focused on admin tasks for the new entity. I have started carrying around a binder with virtually every potentially useful document because invariably I will be asked for an obscure account or filing number that would have cost me an extra trip to the office if I didn't have it on me.

Reply by a searcher
from University of Southern California in Charlotte, NC, USA

Hi Christina, How exciting for you. There is no right answer that fits ever deal. You need and the seller need to work it out together. One of the big issues is people retention through this especially true for you with such a small team. Everyone thinks the worst when there is big change. So putting together a good change management process around people is a priority. I've seen employees told prior to close like a few days. I've seen it earlier through due diligence and I've seen it the day of close. It all depends on what is right for the people and the business for a smooth transition.

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