Sale of a Business & Employee Retention

When a business is sold, the best-case scenario is that all employees at the purchased company transfer to the purchasing entity. Unfortunately, this typically is not what happens. In fact, it is common for the employees of the company being purchased to be left in limbo as to what will happen to them until the sale is finalized. So, what is the best strategy for informing your employees of the sale, but convincing them to stay engaged during the transition, even if you cannot tell them what the future holds for them?

Be transparent

Employees will react much better if the news of the transition comes from their employer and not through the rumor mill. Even if you cannot tell your employees much, you will gain more respect and trust if you are communicating with them. Nobody wants to feel shut out and left in the dark, so being honest with your employees as soon as possible will make it more likely for them to stick around.


If the purchasing entity is providing the opportunity for employees to remain with the new company, efforts should be made to immediately integrate them. The sooner the employees feel loyalty and a sense of belonging in the new business, the more likely they are to stay and help ensure the new entity’s success.

Retention Bonuses

If the purchasing entity decides it will not transition the current employees, it may be necessary to offer retention bonuses to keep key players onboard until the transaction is finalized. Offering retention agreements can also reward certain employees who are willing to continue working until new management has time to figure out their next steps. In addition to getting the bonus payment, retained employees have the opportunity to prove their worth to the new management, which may result in a job offer with the new entity.

Employee retention

Using stay bonuses to keep key employees until a transaction closes or some other future date can be an effective way to ensure the transition phase goes smoothly. However, it is important to handle it correctly. The sale of a business can be emotional and stressful for employees, so seeking the assistance of an experienced retention attorney early in the process is important.

Negotiating and drafting retention agreements is Mailly Law’s primary area of practice. We have years of experience and understand the complexities involved. Let us fight for your rights and help obtain a contract that is the most beneficial to you. Contact our office today.