When should you tell your staff that you are selling your IFA business?- IFA Acquisitions

When is the right time to tell your staff that you are selling your IFA business? It is extremely important that staff be kept in mind during an acquisition, especially since staff often have strong relationships with clients. A good communication strategy will promote business continuity by ensuring that the right messages are communicated to reduce the anxiety of your employees, boost morale, and retain talent. Choosing the right time to implement this communication strategy is key for a smooth transition

Your staff are very important

Employees are critically important stakeholders! They must be excited about the new company’s vision and buy into it. Before they can get there, however, they need to understand what will happen to them. They will likely be wrestling with many questions that you will need to answer:

Do I have a job now? Will I have a job in the future?” “Whom will I be reporting to?” “Do I belong here?” “What changes will I be required to make with clients’ investments. Service proposition and fees charged?”

Staff also convey the organisation’s future vision and strategy to other key stakeholders for example clients. Building enthusiasm for the acquisition allows any misinformation or myths that may arise to be corrected. Open communication will help to alleviate anxiety in your staff and help them to understand what to expect both before and after the acquisition.

So, when is the right time to talk to your staff?

A group of employees standing in a line and smiling together

Why can telling your staff too early be an issue?

Change is scary – The fear of the unknown can be a real issue for your staff once they learn of an impending acquisition. Your staff trust you and may feel concerned about what will happen to them once you have exited the business. Telling your staff early in the acquisition process may mean you are unable to answer their questions, leaving them open to fear, demotivation, and uncertainty. Although a merger or acquisition is a confidential process, the news may leak regardless, given the number or parties involved. Your staff could potentially impart some of their uncertainties with other key stakeholders, which could have a knock-on negative effect for the business.

Staff may consider their options – A natural response to feelings of uncertainty is to seek out a clearer path! Your staff may begin to consider their future and might look at moving elsewhere, even before the acquisition process is complete.

Risk of devaluing your business – If your staff begin to move elsewhere, you risk devaluing your business. Quality staff is highly sought after, and the strong relationship between staff and clients will help to ensure a smooth transition, maximising retention. If your staff begin to look elsewhere due to feelings of uncertainty, you risk losing this valuable relationship, potentially reducing your client bank, and thus devaluing your business.

Losing clients during an acquisition is a concern for all vendors! Download our free eBook here for helpful tips and guidance on maximising your client retention.

Why can telling your staff too late cause problems?

There is a great deal of information that will need to be conveyed to your staff regarding the transfer and their employment, such as their employment rights. According to TUPE (Transfer of Undertakings Protection of Employment) regulations, employees must not lose their existing employment rights. Employees can refuse to transfer if they wish, however they may lose valuable legal rights if they do.

TUPE also states that ‘all the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts of employment are transferred to the transferee’. The new employer assumes responsibility for all rights under the contract of employment, statutory rights, and continuity of employment. This comprehensive concept also includes the employees’ rights to bring a claim against the employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims. To learn more about TUPE and the legal requirements it covers, have a read of this helpful article.

There is the possibility that there will be dismissals and redundancies during the process of an acquisition. It is important to remember that any dismissals that are solely or primarily due to the transfer will automatically be considered unfair dismissals. However, dismissals for economical, technical, or organisational reasons (an ‘ETO’ reason) that require changes in the workforce are not necessarily considered unfair.

Effected employees must be given enough time to discuss all of this information and any proposed measures, therefore you need to inform your staff or their appropriate representatives in a timely fashion to allow for a consultation to take place. Informing your staff too late may mean there won’t be enough time for a consultation or an adequate notice period. Though the length of this notice period can depend on the size of the business and the number of staff, generally you should aim to allow for between two and four weeks.

When do you know the time is right?

Know your exit strategy – You should have a clear idea of your exit strategy when informing your staff of an acquisition. Knowing what the process will look like is hugely beneficial when answering any questions your staff may have. Being able to offer clear, concise, and informative answers will help to put your staff at ease and increase their confidence when moving forward with the Acquirer.
Planning your exit strategy can be tricky, especially if you are unfamiliar with the selling process! This comprehensive guide offers a great insight into what you can expect from the process. We also offer a free informative eBook on planning your exit strategy which you can download here.
Consider working with specialists – We advise enlisting specialists where possible during all stages of the acquisition process, including when informing your staff of an impending sale. You may want to consider involving a HR specialist when telling your staff about an impending acquisition. It could help your staff to feel reassured that you are looking after their best interests and that they will not be subject to huge, sudden change.

Here at IFA Acquisitions, we partner with a number of specialists that provide our clients with reliable expert advice. In 2022, we partnered with HR industry specialists, HR People Support. They are an outsourced HR company that supports businesses in ensuring they meet all necessary legal and compliance requirements, as well as supporting staff to feel motivated and reassured in their roles.

To learn more about HR and the acquisition process, watch this helpful video on the IFA Acquisition YouTube channel that details the staff journey, including staff consultations, timings, inclusion and more.
Include the Acquirer where possible – If you are able to, including the Acquirer can help to make your staff feel more reassured when you inform them of the impending transition. It will aid transparency and offer your staff the chance to discuss any concerns in advance to the change of control.

Conclusion

Choosing the right time to tell your staff that you are selling your IFA business is key to ensuring your staff feels prepared for the change, as well as ensuring you maximise the value of your business.

Consider your exit strategy carefully to equip yourself with the answers to any questions your staff may ask, ensuring you communicate any changes with your staff within a reasonable amount of time before the completion date!

Considering selling you IFA business? Why not get in touch to discuss your options!