We know we cannot run a transaction process entirely in secret, but we only want to bring our top tier of leadership into the loop. How do we decide exactly which key managers to tell about the impending sale, and what specific milestones must we hit before we bring them into the deal circle?

Question

Tyler Smith · Accepted Answer

You cannot sell a business alone, but telling the wrong people too early creates toxic gossip and operational paralysis. You must be highly strategic about who enters the deal circle and when. We advise limiting this information to a need-to-know basis, starting with your executive team members who are critical to pulling due diligence data.

To determine who to tell and when, map your team against three specific milestones.

First, the preliminary stage. This is when you are preparing your books and drafting marketing materials. At this point, keep the circle extremely tight. Usually, only the owner and possibly the Chief Financial Officer or your Integrator should know. Tell them only if they are absolutely required to compile the initial data room.

Second, the Letter of Intent stage. Once you sign a Letter of Intent, the volume of diligence requests will explode. This is when you must bring in key department heads, such as your operations leader or technology head. Explain that the transition is a growth opportunity for the company and outline their specific role in securing a successful outcome.

Third, the pre-closing stage. Do not notify the broader management team or general staff until all contingencies are cleared, the financing is locked, and the purchase agreement is finalized. Usually, this is just days before or even the day of closing. Keep performance metrics high throughout this timeline by using your weekly Level 10 Meeting to keep everyone focused on their quarterly Rocks rather than the transaction.