Should you tell your team you're planning to exit?

I find this a fascinating question, as I've heard so many different variations over the years of how founders have delivered the news of being acquired. The contributors were also brilliant this week - all speaking from first hand experience.

IMO here are some things to consider when evaluating how to communicate your plans to your team:

The type of exit
Are you planning a trade sale?
Are you doing an Employee Ownership Trust?
Will it be a Management Buy Out?
...

Depending on the type of exit, you're likely to have a different communication strategy.

The size of your company
If you're a team of 15 people and you're planning to sell your agency, it probably isn't harmful to get everyone on board with it. There is often a lot of trust and open communication in a small team. And you can rally a small team around the mission.

However, if you're 50 or even more, I'd definitely recommend taking the controlled communication route. There are many people that are too removed from the end result. Being fully transparent about your plans to exit will probably cause more uncertainty and lack of productivity, rather than being a source of motivation.

The order of communication
I thought Tristan put it well...
First in line will be your fellow Board of Directors. Without them the deal probably can't go ahead.

Next in line are the people that will benefit from the deal and will be a key part of the future plans of the business. They need to be involved in the planning stage.

Also if there are no co-founders on board, those people are often the ones that will continue moving the business forward. While the founder is focussing heavily on making the acquisition happen. Nothing worse than a deal falling through, and the business is in a worse state because the founder and management neglected business as usual.

David made a good point:
"If they know about your plans, it is bound to be a massive distraction from their work, trying to second-guess the various buyers and outcomes."

Then those that might benefit from the deal, but are not key to the decision making process. Only once the deal is pretty much over the line I'd recommend telling them. e.g. often times good employees who have been loyal to the business will be incentivised to stay on board for a few years, receiving a bonus at the end of it.

The key thing to remember is that for a deal to go through there are so many variables and moments where it could go wrong. So those that are involved in the process need to keep their cool in the negotiation process. I personally would therefore hiring an M&A firm or M&A expert to help guide you through the process. Especially if you're doing this for the first time.

Appreciate you taking the time today to read our Polynut newsletter. Any comments, ideas or questions - feel free to reach out to me [email protected]

And a HUGE THANK YOU to our contributors for giving up their time to share their knowledge with us and providing multiple perspectives! 🙏

Cheers ✌️
Daniel