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Selling your shop: to tell or not to tell

by Art Little

Transmission Digest Magazine
This article appeared in the November 2001 issue of Transmission Digest.

When you are selling your shop, do you tell the employees the shop is for sale or keep it a secret? It's a tough issue in the industry and I know there are a lot of employee's, shop owner's and prospective shop owner's involved in this very situation right now all across the country. So, let's evaluate some of the pro's and con's of the two choices shop owner's are faced with.

If you are an employee working in a shop that the owner has not told you it is for sale, but you find out it is for sale, you have a tough decision to make. I remember the first shop I worked in as a manager. I had just gotten out of school and was dumb as a rock. It was for sale when I went to work there. The builder that had worked there for 5 years knew it was for sale. The manager that was training me and the secretary knew it was for sale. One day, about two weeks into it, a guy that I met while I was in school, came by to see me, so I thought. He knew it was for sale. I guess everybody knew it was for sale but, no one told me about it. I recall feeling pretty stupid when I found out and felt like I had been duped by the shop owner that hired me to manage his shop. I knew I had not been in the business long enough to find another job and did not know anyone else in the industry to go to work for. There was no job security there but, I liked the job and I didn't know what else to do except keep selling and managing the shop. So that's what I did.

Shortly thereafter, the manager and secretary left after they were turned down for their loan, I never saw the "friend" from school again, and I ended up managing that shop for 2 years for the same owner. However, I never trusted the owner again and always operated at arms length with him. When I left, the owner received no notice and I took the builder and shop forman with me to my next employer. I remember, I slept like a dead man that night with no guilt. What goes around comes around in this business. I just don't like to be lied to and I am patient in exacting justice when I feel like I have been wronged.

There is a lesson to be learned here if you are an employee. First, even though the shop is for sale, it doesn't mean it will sell. That shop did not sell. Second, if you find out the shop is for sale, don't panic and do something stupid. Also, chances are, the new owner will probably be better to work for than the owner who is selling the shop?

Look at it this way, the guy that is selling wants out for some reason. He doesn't want to be there. The guy that buy's the shop wants to be there. The new owner is excited about his new business. Things will more than likely get better at the shop when it sells. The only chance you take is that the new owner will bring in your replacement and you will be terminated or the new owner will be someone you don't want to work for.

With the shortage of employees now days it is unlikely that the new owner will bring in a replacement. However, he might be someone you don't like for one reason or another. So, if either happens, be smart and already have your feelers out so you can move into your next job quickly if you have to. The smart money bet is to wait and see what the next owner is all about as long as your paycheck is cashing. You want to know what kind of person he is and what he has to offer before you jump ship. You may be mad at the owner for trying to hide the fact that he is selling the shop, but you are familiar with the shop and you also know that will be valuable to the new owner. You might get a raise. Who knows. Hey, business is business.

Why do shop owners choose to not tell the employees they are selling the shop? The idea behind not telling the employee's the shop is for sale is to keep it quiet so they will not get paranoid and go to work somewhere else and leave them with a shop to sell with no employees in place. It is hard to sell a shop that is not fully staffed and making money.

That's fine if it works and no one finds out. However, the down side is if it doesn't work, and the employees leave, your net profit will drop in a heartbeat and the value of your shop declines drastically. Also, you have to go into the shop every day knowing you are not being totally honest with your employees. The fear of someone finding out and leaking it to your employees will make for many sleepless night during the sale. If they get wind of it, then what?

I know that most of the time, the choice that shop owner's make, is to hide the fact that they are selling their shop. However, as a shop owner you must consider that there are no guarantees that your employees will not find out you are selling the shop if you choose to hide it from them. The reason I say that is because I also know that this industry is a tight knit group that shares information with each other through a very efficient grapevine. Employees are not stupid and people talk. One slip up, one leak, is all it takes and the cat is out of the bag. When that happens, you have got a big problem. Not only do you loose the employees you have, you will find it difficult, if not impossible to find anyone to come to work for you and fill these vacancies. You have made your bed at this point.

Now let's take a look at the other side. As a shop owner you do have the choice to be honest with your employee's and tell them you are selling the shop. It may backfire on you, but it might not. A lot will depend on how you deliver the news. If it doesn't backfire, it can work to your advantage while you are selling the shop. But you have to be smart about it and be willing to share the wealth.

First of all, your employee's will more than likely respect you for being honest with them. It is better they hear the shop is for sale from the owner than someone else. You have been working together as a team and it is up to the team leader to inform the team of the decision to sell and lead them through the changes. It shows loyalty to the team on your part. If you have been honest with them all along and they like working for you, chances are they will not leave. They can help you while you are selling the shop by keeping it clean, so it presents well, and keeping it productive, so you can sell the shop for the maximum amount.

If you decide to tell the employee's your plans to sell, you need to have a group meeting with them all and explain why you are selling the shop and then follow up with a one on one meeting with each employee. Explain to them that they will have a choice to work for the other owner or not when the shop sells. Tell them that you need their loyalty now more than ever and you are willing to make it worth it to them to stay.

Offer the employees a percentage of the sale of the shop if they stay with you. That way, they will have severance pay if they choose to leave or the new owner has a replacement for them. The bonus at the point of sale takes away the fear of abruptly having to find another job when the new owner takes over. The employee will have the money he needs to take his time finding the right job instead of having to take the first thing that comes along in order to put food on the table. If he chooses to stay with the new owner, he gets a nice bonus and can spend it on whatever he likes.

Now, an employee still may quit before the shop is sold, but he will be walking away from a nice bonus if he does. This will increase the probability that they will stick it out if they trust you. And if they do, the more work they put out, the bigger the bonus. Also, if you have an employee quit before you sell, it will make it easier to hire a replacement if there is a bonus involved.

For the person buying a shop, he is living in a dream world if he thinks he is buying a shop that is fully staffed. The first day, he can walk into a shop he has just spent his life's savings to buy and find all the employees loading their tools and leaving. It's happened before and it will happen again. They may be mad at the previous owner and never give him a chance to prove to them that he will be a better employer than the previous owner that deceived them. They will see him as part of the lie. This is America, employees can work where they want to. They have that choice. That fact rarely comes up in negotiating the sale of a shop.

Buying from a shop owner that has made the choice to hide the sale from the employees forces the prospective buyer to sneak around and he may never get to see the employees work together while the shop is in operation. They have to rely on numbers to make a decision on buying the shop. This is a people business. Ideally, you need to meet the people that are going to make you or break you as a shop owner before you buy the shop and be assured that they are at least going to give you a chance to prove yourself. If you buy a shop from the owner that has chosen to be honest with his employee's, you can go into the shop while it is operating and see it in action and meet the employees. This is to everyone's advantage because it removes the fear of the unknown for the employees and the prospective shop owner.

Bottom line, the fear of the unknown is why employees leave when a shop they are working at goes up for sale or sells. To the employees I say: Be patient and do not over react. To the prospective shop buyer I say: Beware of assuming the employees will stay after you buy the shop. To the shop owner selling his shop I would say: There are ways to take the fear away and be honest with your employees and prospective buyer's. It is a gamble. It's your choice and there are no guarantees. All you can do if you are selling your shop is make the decision that is best for you and hope it the right one. But remember boys, Mama always said: "Honesty is the best policy". Until next time, take care of each other out there and let's all pray for America.

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