Skip to content

Increasing Business Value – Retain Employees, Especially Now

Increasing Business Value - Retain Employees, Especially Now

“To win in the marketplace, we believe you must first win in the workplace.  I’m obsessed with keeping employee engagement front and center and keeping up energy around it.” Those words of Doug Conant, business leader and former CEO of Campbell Soup Company, are particularly true today.

The talent market was tight before COVID-19, however, it is critical now. Finding employees, and keeping them, is a challenge for all business owners. If you’re selling your business, your employees just might be the buyer’s number one concern.

In the Q2 IBBA and M&A Source Market Pulse Report, a quarterly survey of M&A advisors, employee issues topped the list of Buyer Due Diligence concerns. Employees, specifically longevity, loyalty, and work ethic, ranked ahead of other priorities like operations, revenue, and even customer concentration.

Companies having trouble growing talent organically turn to acquiring businesses with talent!

However Buyers know for that strategy to work, they need to acquire a fully staffed, stable employee team and a culture of retention.

Top Employee Issues  that Buyers care about right now:

Turnover: Buyers are looking at turnover and retention rates. If you’re constantly in hiring mode to replace departing talent, buyers allocate more risk (and lower value) to the business.

Culture: Employees remain in their jobs for more than salary and benefits. Buyers want to know what it is about your workplace that makes people stay – and how it will mesh with their own culture.

Training: One way to keep people loyal and engaged is to have a strong learning and development program. Buyers see value in companies with a culture of internal mentoring and promotion, particularly if it’s shown to increase employee retention.

Cross-Coverage: COVID-19 spotlighted the need for cross-training. Cross-trained employees are better able to fill in for workers who want time off, who need extra help during a busy shift, or those who are sick or quarantined and unable to come into work.

Leadership Potential: Employees who are able to take on new challenges and help a buyer grow, should be identified! It is important to retain them and keep them engaged in the run-up to selling your business.

Note, we typically do not recommend disclosing your exit plans to employees. If employees find out your business is for sale, they may look for another job rather than risk an uncertain future with a new owner.

Depending on your personal and financial goals, we may be able to find a buyer who will offer equity positions to select team members. A chance to get a real ownership stake in your company could be just the incentive your top talent needs to stay.

Talk to your M&A advisor about your key employees, stay bonuses, and what kind of succession planning is right for you!