Should you tell your staff you are selling?
One of the first questions owners ask, and the one where getting it wrong does the most damage. Here is how confidentiality works during a business sale.
General information only, not financial, legal or taxation advice. Tony Pope holds Queensland Office of Fair Trading licence 4963575.
The short version
- Staff, customers and suppliers should not be told at the start of a sale process. Nothing is marketed and no buyer is approached without the owner's written approval.
- A business is advertised anonymously, without the trading name, the address or anything that identifies it.
- Buyers sign a confidentiality agreement and are qualified before they receive any identifying information.
- Key staff are normally told once a contract is signed and the main conditions are close to satisfied, not before.
- If word gets out early the usual damage is staff resignations, customers hedging, and suppliers tightening terms, all of which reduce what the business is worth.
This comes up in almost every first conversation. An owner has decided to test the market, and the very next thought is what happens if the team finds out.
The short answer is that they should not find out, and a properly run sale process is built specifically to make sure they do not.
Why it matters more than owners expect
If staff hear that the business is for sale before there is anything concrete to tell them, they do not hear "the owner is planning ahead". They hear "my job is uncertain". The good ones, the ones with options, start looking. They are also the ones a buyer is partly paying for.
Customers do the same thing in their own way. They do not cancel, they hedge. They start taking a second quote, they slow down on renewing, they wait and see. Suppliers who have been generous on terms quietly tighten them.
None of that shows up as a dramatic event. It shows up three months later in the numbers, right when a buyer is examining them.
How confidentiality actually works
Nothing happens without your written approval. The business is not marketed, and no buyer is approached, until you have seen and signed off on exactly what goes out.
The advertisement does not identify you. A listing describes the business generically. A sector, a rough location, an indication of size, and what makes it worth buying. No trading name, no address, no photographs of the premises, nothing that lets someone work out who it is.
Buyers sign before they learn anything. An interested party signs a confidentiality agreement and answers questions about their background and their capacity to buy before they receive any identifying information. Tyre kickers and competitors fishing for information do not get past that step.
Information is released in stages. Early conversations deal in ranges and generalities. Detailed financials, customer information and anything commercially sensitive come later, to a shortlist, and often only after an offer is on the table.
Competitors are handled deliberately. Sometimes the best buyer for a business is a competitor. That is a real conversation to have, but it is one you have knowingly, with controls on what they see and when, not by accident.
So when do you tell people?
Usually once a contract is signed and the major conditions are close to being satisfied. At that point you are not telling your team about a possibility, you are telling them about a decision, and you can answer the question they actually care about, which is what happens to them.
Handled that way it is generally a non-event. Most buyers want the team to stay, and most staff, once they understand that, get on with it.
There are exceptions. Sometimes a very senior person needs to be brought in earlier because the buyer wants to meet them, or because they are genuinely part of what is being sold. That is a judgement call, and it is worth making it deliberately with someone who has done it before rather than in the moment.
The practical point
Owners often delay having a first conversation because they think enquiring is the same as going to market. It is not. An appraisal is a private conversation about where you stand. Nothing is listed, nothing is advertised, and nobody is contacted.
You can know your number, understand what a buyer would question, and decide to do nothing for two years. Plenty of owners do exactly that, and they sell better for it when they are ready.
Common questions
When should I tell my staff I am selling the business?
Usually once a contract is signed and the conditions are close to satisfied, so what you are telling people is settled rather than speculative. Uncertainty is what damages a team, not the sale itself. The timing and the wording are worth planning with the buyer in advance rather than improvising.
Will my staff lose their entitlements when I sell?
A transfer of business has statutory consequences under the Fair Work Act. Some entitlements must be recognised by the new employer and others may be paid out by you at settlement, depending on whether the parties are associated entities and what is agreed in the contract. The Fair Work Ombudsman publishes the rules and your solicitor should deal with it in the drafting.
Do I have to tell my staff before I sell?
There is no general obligation to announce a sale process to staff in advance, and most sales are run confidentially precisely so that uncertainty does not damage the business. There are obligations at the point of transfer regarding notice and entitlements, and those are a matter for your solicitor.
Keep reading
All notes on selling a business · All seller guides · What is my business worth?
Check it yourself
Primary sources, none of them affiliated with me and none of them endorsing this site. Where anything here differs from an official source, the official source is right.
Links open on external government and industry websites. The full list sits on licensing, registers and official sources.
Ask what it is worth
Free, in writing, and nobody finds out you asked. Tell me the trade and the suburb and I will do the rest.
Nobody finds out you are selling. This goes to me only, into my own database in Sydney. I will not contact your accountant, your landlord, your bank or your staff, ever, unless you ask me to.
If you would rather not put anything in writing yet, ring 0431 124 128. Prefer to pick a time yourself? Book a time in my diary.
Thinking about selling?
Thirty minutes, on the phone or in person, at a time that suits you including evenings. You will get a straight read on where the business sits today and what would move the number. It costs nothing, there is no obligation, and nobody finds out you asked.