The employee recruitment and retention crisis is all over the headlines right now – the Great Resignation or the Great Reshuffle. Whatever you want to call it, it’s a phenomenon that’s impacting business owners across the country. And, it doesn’t seem like this trend will be changing any time soon. A recent survey suggests that nearly half of employees are looking for a new job or plan to soon.

If you’re considering selling your business, retention of your key employees may be much more important than you realize. Recent reports show that buyers are chiefly concerned with keeping employees in place after they close on their acquisitions:

  • For business sales that closed for less than $2M, the top buyer concern was employees – specifically longevity, loyalty, and work ethic.
  • For deals in the $2M to $50M price range, accurate financials barely edged out revenue and management team/key employees for the top spot.

Keeping the management team in place to run the business is clearly a priority for buyers. From their perspective, key employees are a significant benefit to purchasing your business and they are a liability if they do not remain with the company. Losing those employees can kill a deal or significantly decrease the value of your business.

It stands to reason that keeping the key team intact will help ensure a smooth transition after the deal, from everything including sales and customer relationships to managing processes and other employees. During the selling process, buyers will want to know how you plan to retain your team as part of the deal.

And if you’re thinking about selling your business internally to your key employees, obviously, you need your potential successors to stick around!

In preparation for our upcoming webinar, we’re launching a blog series on the topic of retaining key employees to protect business value.

We’ll be discussing how to:

  • Determine who in your organization is critical to your operation. Our colleagues at Alliance Private Wealth just recently published an article on this topic.
  • Ascertain if any of your key employees are at risk of leaving now or in the future if you decide to sell.
  • Select your eventual exit strategy. Deciding how you’re going to transition out of the business – whether to internal or external buyers – will impact the employee retention strategies that you will employ.
  • Implement key employee incentive strategies. While just offering them more money may seem like the easiest way to keep your employees, it might not be the best strategy. There are tax, legal and contractual implications to consider, in addition to time constraints and more. There are a lot of options to choose from.

As we continue this series, we will discuss specific types of employee incentives and how they go hand-in-hand with different exit strategies.

When preparing to sell your business, it’s crucial that you determine the best way to retain your key employees. A strong management team is critical to achieving maximum value when you sell.

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