This is often even more true for the employees of the companies involved, as their jobs depend on the success of the succession. As part of a succession process, it is therefore particularly important to determine the right time to inform employees.
In our consulting practice, we are very frequently confronted with the question of when employees should be informed. If not, the issue is actively addressed as part of the succession process.
In the case of an intra-family transfer, the issue usually resolves itself, as the successor is typically known and is already working in the business. Here, the challenge lies in ensuring a smooth transition of responsibilities, which is all too often influenced by strong emotions on both sides. In these cases, it has proven very effective to define a handover process with clear milestones. As part of this succession planning, potential critical issues are addressed early on, and approaches to resolving them are developed.
A clear handover roadmap for an intra-family generational transition provides security
If, on the other hand, a business sale is on the horizon, the situation is quite different. Since a sale process can drag on for one to three years and is often accompanied by setbacks, maintaining the confidentiality of the project is crucial to its success. If employees learn of the company’s intention to sell right at the start of the process, uncertainty about the company’s future—and possibly the pressure to seek other opportunities—will grow as the sale drags on. If investors are also involved, rumors of layoffs and imposed corporate cultures can quickly have a negative impact on the work environment. This can lead to a wave of resignations and, consequently, the loss of valuable company know-how.
Confidentiality and Non-Disclosure in a Company Sale
To ensure confidentiality during a company sale
, there are several factors to consider. First and foremost, it is important to verify whether the business owner has already “spilled the beans” beforehand. If this can be ruled out, it is advisable to develop a strategy for the entire process and to account for as many contingencies as possible.
This includes, among other things, the following questions
What documents are necessary for the sale process, and can the business owner obtain them discreetly?
Will it be necessary to bring employees into the loop who are bound by a duty of confidentiality? Are additional confidentiality agreements required for this?
How can interest be generated when advertising the sale while still maintaining anonymity?
How can confidentiality be ensured for prospective buyers once anonymity is lifted?
Where do the negotiations take place?
When and under what conditions can prospective buyers conduct a site visit?
Employee Notification in the Event of a Transfer of Business
If all steps of the process are carefully planned, organized, and adhered to by all parties involved, the process can generally be conducted confidentially. However, it is equally important to ensure that subsequent communication with employees, customers, and suppliers is timely and professional. In particular, during a business transfer, care must be taken to provide timely written notice to employees—as required by Section 613a of the German Civil Code (BGB)—when the company is sold.
A successful business succession is always a reason to celebrate—and not just through an open house for customers, service providers, and suppliers. For example, we’ve had positive experiences with company-wide meetings where the seller and buyer jointly inform employees about the planned transfer and then raise a toast to the company’s future.
