Be Careful with Employee Terminations When Selling Business
Nov. 30, 2014
When it comes time to sell your business, there are hundreds of different things to think about: Gathering tax forms, putting together financial statements, minimizing the company’s reliance on you, streamline and document processes as much as possible, etc. One of the things that is often far from the top of the list is considering what to do with the current workforce.
Will the employees carry over to the new owners? Will they be paid the same and get the same benefits/insurance? Do they have to be given notice in such cases? If they’re not being brought over to the new owners, when is it required to give them notice?
These are just some of the questions that you will need to ask yourself. The employee workforce is an important part of any business, and the buyers will likely want to take over the existing one, so there’s a good chance it will be covered in great detail by you and your attorney. On the off-chance that the buyer is not interested in your workforce, you will need to take the appropriate steps.
Since every state has some form of employee protection, you will need to be careful not to cross any lines, or you may be opening yourself up for legal trouble. It is not impossible to imagine a scenario where the employees are not told of any pending sale until it is right about to happen, and without any notice, they are not adequately able to find suitable other employment before they are terminated. This could potentially leave you vulnerable to unemployment claims, and even wrongful termination lawsuits.
You also do not want to spread the word too early, since that could damage the prospects of selling the business. Say, for instance, that you are just first getting your information together and finding a sale of business attorney. You might not want to announce your intention to your entire workforce just yet, as that could cause a mass exodus of employees, making your business operations that much more difficult while you’re also courting buyers.
There is a fine line to walk when it comes to dealing with employees and a potential business sale. If you ever have any questions, or are unsure where that line is, do not hesitate to get in contact with a qualified sale of business attorney. They will be able to walk you through the entire process, and will help you maximize your sale price while minimizing your effort.