are your employees working conditions important when preparing your business for sale?

Why are your employees working conditions important when preparing your business for sale?

When the time comes to sell your business there are many things that you will need to consider and prepare in advance. One of the factors that is often overlooked is the importance of your employee working conditions. Why are your employees working conditions important when preparing your business for sale? Keep reading to find out.

Focus on your workforce:

Presenting a well organised and dynamic workforce to potential investors or buyers is essential when trying to close a sale. It is crucial that you have all your employees regulated, i.e., pay overtime, per diems, etc. Analyse the possible employment of freelancers or the status of partners who provide services in the company. Buyers look for well-organised companies and do not want problems to arise because of any labour irregularities. All possible sources of problems detract from the attractiveness of your company and therefore can lead to complexity in the payment of the price, in the form of contingent payments, escrow accounts or lowering the price.

Find out why you should prepare your business for sale as early as possible here

Have you become the “orchestra man”?

“The orchestra man” in a company means that everything depends on you and all desicions come from you.  Instead, you should professionalise your company by having a structure that allows you to distribute responsibilities so that in turn, everything does not depend on you. If you don’t already have one, hire a general manager to manage the company and report to you as president or CEO. This will allow you to make a much smoother transition when the buyer, a financial investor or an industrialist enters the company. When the buyer observes a very hands-on company management, the deal often falls through, especially with international buyers.

If you would like to find out more ways to prepare your business for sale, click here

The labour aspect in a service company is especially relevant for the sale of the company. As long as everything is in accordance with the current regulations, you will avoid possible contingencies in the sale process. Remember that the objective of preparing your company for sale is to eliminate obstacles that may hinder the process. Furthermore, it would help if you created a management team with attractive incentives for the fulfilment of objectives and with personal development plans to keep them loyal to the company. It is also advisable to involve key executives in the sale because you will need them to offer the best face to the investor and ensure that the company is in the best hands.

How can you prevent executives from leaving during the negotiation phase?

When preparing your company for a sale, it is encouraged to prevent executives from leaving during the negotiation phases of the sale, as this could be devastating to the buyer’s perceived value. One measure we have implemented on occasion with the entrepreneur has been to inform key executives of the sale idea and reward them with a percentage of the transaction value, encouraging them to collaborate to improve financial ratios during this period.

To sum up, it is clear that when the time comes to present your business to potential buyers or investors, having an organized workforce is an essential component to the success of the sale