When to Tell Employees You’re Thinking of Selling

Lois Melbourne and her husband started Acquire Solutions, a software business that helped large companies manage their employees.  After 18 years, they had grown to 85 people and  received an offer from a private equity firm.

To read a transcript of this episode, click here.

Lois Melbourne and her husband started Acquire Solutions, a software business that helped large companies manage their employees.

The Melbournes self-funded their business over 18 years, eventually growing it to 85 people when they received an offer from a private equity firm rolling up software companies in the human resources field.

The offer represented enough money for the couple to permanently retire in their forties, but it did not come easily.

To get the deal done, Melbourne had to negotiate with an army of lawyers representing the private equity buyer. She also had to find a way to tell employees who were like family members to her that the business was being sold. The stress of the negotiation and a feeling of loyalty to her staff left Melbourne in tears as she tried to explain to her team why they had sold the business. In this episode, you’ll learn:

• How and when to tell your employees you’re thinking of selling.
• How to get your senior managers to help with the negotiation.
• The pros and cons of selling to a private equity firm.
• How acquirers view the collectability of international receivables.
• The definitions of escrow and warrants and how to negotiate each.
• The surprising role a good advisor plays in getting your deal done.
• The importance of having a digital archive.

Do You Have a Positive Cash Flow Cycle?

Unlike a lot of software companies, the Melbournes were able to keep 100% of their equity as they grew their business to almost 100 staff, which comes down to having a positive cash flow cycle, something we’ll cover with The Valuation Teeter Totter exercise in Module 10 of The Value Builder System™. Get started for free by completing your Value Builder questionnaire now.

Check out our full M&A Glossary

About Our Guest

Author and speaker, Lois Melbourne, co-founded Aquire Solutions in 1994 and sold it in 2011. Thanks to her co-founder, Chief Technology Officer and husband, Aquire created innovative talent management, and human resource analytic software which Melbourne and her team sold to enterprises all over the world. As an entrepreneur and CEO Melbourne helped organizations align their best workforce with their missions and goals. She is most proud of the culture they developed within Aquire which fostered a productive, creative, dedicated workforce that enjoyed their work.