Key employees are beneficial to your business. Not only because of the roles they play when you own the business but for those, they play when you decide to sell your business. When potential buyers evaluate your business, one of the things they will look out for will be retaining key employees to ensure that there are no hitches in the smooth running of the business. Most buyers won’t want to employ new employees because that may delay the activities of the business. Business owners sometimes downplay the importance of key employees. However, there is no safety in such denial and a wise business owner knows not to allow such denial to affect the business. Prospective buyers will want to conduct research into your key employees and the probability of them leaving after the sale. If these factors don’t satisfy the buyers, they may opt to buy another business with ideal plans for retaining workers.
How Do You Identify Key Employees?
Key employees are easily identified based on a number of factors like Experience, industry knowledge, relationship with customers and vendors, and involvement with critical development projects. All employees are not irreplaceable. These factors are the ones that distinguish key employees. Sometimes, you may not have designated important roles to these employees but because of their service, they have created so much value for your business.
Factors Influencing How Much Key Employees Impact Your Deal
These factors are the ones that determine how much key employees affect your deals.
1. Buyer: The type of buyer matters. Financial buyers who are not versed in that particular industry will want to retain workers.
2. Customer base: Your customer base is another important factor that determines how much key employees will influence your deal. Do you have customers who are loyal to the brand? If only a minority of your customers are loyal to the brand, retaining key employees is very important to ensure the business continues to run profitably.
3. Your sales cycle: What does the sale cycle of your business look like? If the sales pipeline of the business is loaded, the key employees will be those who work in the marketing and sales department.
How To Retain Key Employees When Selling Your Business
Here are some of the ways you can encourage key employees to stay with the business even after selling to a new owner.
1. Introduce a stay bonus agreement for key employees that stay with additional financial benefits.
2. Making phantom stock agreements with key employees gives them the added incentive to work harder since they will receive a percentage of dividends when the business records a profit.
3. Give them higher salaries. This will help in retaining key employees.
When selling your business, you must always keep key employees in the loop. Buyers are not just only interested in the present state of the business, they want assurance about the future too.