Volume 8 Issue 3, February 9, 2021
I was recently speaking with one of the sellers I represented about the sale of his provider agency. I asked him what he thought was my most significant value during his long selling process. Without skipping a beat, he said, "'The emotional support you provided to me." He explained that it was helpful to talk with me when things got stressful or even a bit scary since I had been through the process of selling my own company.
Like most of us who sell a human services company, his major concern when he sold his business was how it would affect his staff. We had a few calls where he asked me if his staff would be okay. I assured him repeatedly that they would because he had personally vetted his buyers and made an informed and conscious decision for the next phase of the company that represented his life's work. These reminders often helped him to keep the process in perspective and provide opportunities for real, direct conversations with his staff about the sale and future of the company.
Selling your human services company will likely require you to engage in difficult conversations with your staff, like those engaged in by my seller. Over the years, I have learned that most people want to know the truth, even if it's difficult to hear. There is something within us that responds deeply to people who are honest and transparent with us. With a little planning and the goal of engaging in honest and direct conversations, difficult discussions with your staff about the sale of your company can hopefully be completed with a bit less drama while also helping better position your company for its next phase.
The following are five of the reasons you may be selling your company. They represent a few of the most common reasons sellers and I have discussed. All are good motives for selling, and all that are applicable to your sale are worth carefully explaining to your staff and stakeholders.
Most people start their business to provide an unmet need and service. They have the goal of creating a job for themselves and a few others. It is common to suddenly find that what started out as a company intended to support one particular person or a familiar group of people has organically grown beyond its original intent because of the high quality of services provided. Throughout the evolution of their human services company, few owners actively plan for the day they will sell or exit. But the reality is that there will be a day when it's time to move on or retire, for one or more reasons.
When that day comes for you, explaining the reasons to your staff is the best approach since they will likely create their own narrative if you do not. This narrative may not align with the legacy you hope to leave behind and could leave staff asking questions about the viability of the business, stability of their jobs, and suitability of the buyer.
When you sell your company, part of the process is vetting buyers to find the best fit for you and your organization — particularly, your staff. I reminded the aforementioned seller of the importance of explaining this arduous process to staff — that you have taken ample time to meet with, speak with, and extensively evaluate the quality of person and organization that will be buying your business.
Since most or all of your staff will not be part of the sale process, they often have no idea what you have gone through to find the right buyer. Tell them! You don't have to share every reason why you selected a particular buyer but explaining some of the top reasons should prove helpful and comforting.
My husband and I sold our human services company years ago because we feared that the changes required by the Affordable Care Act would financially decimate the company. We saw an unfunded mandate on the horizon and worried about the short- and long-term viability of the company because of our particular financial situation.
We engaged in an honest conversation about these concerns with our management staff. We explained that if we didn't sell to a company that could afford the evolving and growing healthcare expenses of our business, then our company likely wouldn't survive.
We often need to make difficult decisions for the overall good and longevity of our companies. Not everyone will be able to understand why we make these decisions, and some decisions may prove to be wrong, but trying to always do what's right and best for the companies should weigh heavily in our decision making.
Today, we see the benefits of consolidation, as larger companies have a bigger seat at the table with managed care companies, rate setters, and insurance providers. There are many arguments for why your company could greatly benefit from a merger or acquisition in the current healthcare marketplace. Explaining the benefits of such a transaction to your staff will help them see a perspective of the business they might not have considered. Many people in the human services industry are unaware of the funding sources and politics that significantly influence company performance and sustainability.
Many healthcare businesses — within and outside of the human services industry — are experiencing the benefits of growing by acquisition since organic growth is often slow and tedious. For smaller companies, it can prove difficult at best to enter new markets and gain trust and momentum in a new state or region.
Most buyers of human services companies have the same mission and values as your business. They understand that bringing the two of you together can create a stronger, quality service that can support more people. Hopefully the buyer you select will bring strengths to your business that can further enrich the current organization and experiences that will allow you to learn from one another.
Empower your staff members to help the new owner grow by sharing their expertise. The new owner's success is directly related to your staff, and your staff benefit from a thriving organization, so that should prove to be a win-win.
Change is terrifying to many people. However, the alternative is often stagnancy. With change comes new insight, challenges, and different expectations. These can often make employees stronger. A larger organization will typically provide additional resources and opportunities for growth beyond the capabilities of a small agency.
As you share information about the sale and new buyer with your staff, highlight these opportunities for their future instead of focusing solely on your exit. Staff want to know how a sale is likely to affect them. Change can be as good for staff as it is for you.
As a human services leader, you do the best that you can for the most people. But no matter how hard you try, remember that you will likely never please everyone — and that will especially be true when you choose to sell your company. Some of your staff will be happy for you. Others may feel betrayed.
I remember worrying terribly about certain staff members once we decided to move on from our company. The reality was that, when all was said and done, our staff were okay. Many stayed with the company under its new ownership. A few found other opportunities. Just know that there will inevitably be at least one disrupter who rejects your positive outlook. This usually comes from a place of love and fear: love for their job — and you — and fear of the change. All that you can do is support their feelings and remain confident in your decision.
Selling your business comes with many hurdles, but it's the emotional ones that affect our relationships with other people that are often the most difficult to maneuver. By putting in the upfront work, finding a buyer you are confident in and who holds your values and ideals, and having the confidence to communicate about these decisions, you are more likely to create a smooth transition of power.
Don't be afraid to share the realities of these decisions with your staff. They are probably stronger than you think.
As Co-Founder of LifeShare, a multi-state human services and healthcare organization, Rachel has a unique background of over 20 years of successful operational and executive experience, in addition to an MBA in Healthcare Management. She began her professional life as a home care provider, an experience that created the foundation for the innovative quality and success of LifeShare, while also changing her life. At LifeShare, she managed their Operations (Adult Day/Residential; Child Therapeutic Foster Care; HCBS; Child Therapeutic Day/Diversion Services, and Educational Programming), Finance, HR and Quality Assurance (facilitating COA accreditation and policy/procedure implementation). After selling LifeShare to Centene, Rachel remained during the transition of management and helped to provide outcome measurements and COA compliance reporting. At VERTESS she is a Managing Director providing M+A advisor and consultant services, specifically in the I/DD, behavioral health and related healthcare markets, where systems are rapidly evolving, and providers are striving to adapt strategically to diverse challenges.