We are in the 11th hour of purchasing a small business. Throughout the due diligence process the seller has been hyper-paranoid about his employees (whom are in their 60s and 70s) catching wind of the sale, so we have had to access the property only after business hours. Even after the Purchase Agreement has been signed he is STILL very squirrely about his employees finding out. (1) is this normal? (2) any obvious red flags?
Note: seller is hands-off and remote. Employees operate the day-to-day.
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100% Normal.
The sale of a business can mean a ton of different things. And no one can predict an outcome. Not the sellers. Especially not the employees.
But that sure as shit wont stop the employees from speculating and ‘knowing beyond a shadow of a doubt’ how things will playout. They’ll know for a fact they’re all getting fired. Or they’ll know for a fact the business will be closing down. Or half are getting fired.
So they’ll act based on their theories. And that’s a problem because those employees might be some of the value.
I had this problem when I sold my business. The buyers were dragging ass, the employees were in the dark until the last week. Then, the buyers reached out to one of the employees directly, which was forbidden. The employee approached me the next day skeptical and prepared to leave if the business was getting sold.
My lawyer had fucked me over, I didn’t have any close now clause for their violation of the terms, because my lawyer fucked me over. Yea, I’m still salty. I was able to stall employee long enough to get to the sale; the buyer had told me they wanted to keep all the employees. I made it, gave a final note to the employees about the sale. That weekend the new owner fired all my employees, very sadly.
From someone who inherited “great staff” , don’t just take them on, go through the hiring process. They will be your team and from the start its best to eatablish that you are now the new owner and that change is happening. We lost all our staff the first 4 months, they were great , but great with the previous owners. They were resistant to change and treated us like we know nothing. We have our team now and its the best thing that happen to us.
Totally reasonable. It could all fall apart so there’s no reason to alert everyone until it’s all finalized. You could just ask him straight up what the concern is. It will be yours eventually.