Until your company tells you directly, or you hear about it in the media, you likely will not know for sure that your company is up for sale. However, there are several signs of a company being sold that you should know, such as changes in leadership, hiring practices, company performance, secretive meetings, reorganization and rumors of a sale.
Understanding why companies go up for sale and what positive and negative indicators you might notice as an employee can help you assess your job security and prepare for what the future holds, whether that involves staying with your company through the change or looking for new opportunities.
Reasons for Selling a Company
Before you start looking for signs that a company is being sold, it is helpful to know why companies get sold as part of a merger or acquisition. While a sale can happen when a company is in trouble, it can also occur when a company is very successful and is looking to gain some additional strategic advantage.
If a changing economy or a decline in the company's revenue or profitability occurs, then the owner might sell to avoid additional financial loss. An owner might also sell if he is burned out from running the business and is struggling from the efforts to keep it going. An unresolvable conflict with a key business partner or co-owner can also lead an owner to sell the company and move on.
At the same time, when a company experiences a lot of growth or has an advantage over competitors in the industry, selling the company to another key player in the market can lead to a highly profitable merger or acquisition that has a major impact on the industry. Other reasons for selling a company include wanting to eliminate competition, increase efficiency or reduce production costs.
Consider Changes in Staffing
Major changes in existing staff and hiring practices can be one of the signs that a company is in trouble, and a sale may be planned. This not only involves current employees leaving suddenly or getting major promotions but also the presence of new faces along with unfilled positions and hiring freezes.
- Departure of long-term staff: When key employees, especially managers, decide to leave the company suddenly or actively begin networking for new positions, this can be a sign of a major change ahead, including a company sale. For example, you might hear about the company's HR manager privately asking around for references or information on job openings with competitors, or you might see another key player expressing interest in job opportunities on her social networking page. In some cases, top management may even be forced out.
- Sudden promotions: While some long-term employees might be gone, the company may also be seeking workers who can fill top management positions after the company is sold. For example, a middle manager may suddenly be offered an executive position in an attempt to give the company a fresher perspective when a merge or acquisition happens.
- Visits from new faces: An often subtle sign of a possible company sale is seeing unfamiliar people coming into the office and speaking with key personnel. While these people could just be customers or business partners, they could also be from a company interested in a merge or acquisition.
- Unfilled positions: When the company has many open job postings that never seem filled, or the company does not replace the workers who leave, these are possible signs that the company is in trouble and is considering its options. You might also hear rumors of a hiring freeze even though the company seems to not have enough staff to do the work.
Look for Signs of Reorganization
In preparation for a sale, the company might begin reorganizing departments, making major changes to operations or delaying implementation of long-term strategies or key projects. For example, your company might lay off some middle managers, have consultants visit to recommend how to best redirect the organization or begin cutting costs as much as possible.
These signs of possible reorganization may even go unnoticed at first until major change occurs, but they might be happening while the company owner is negotiating a merger or acquisition and setting the stage for the final sale.
Pay Attention to Meetings
Whether you are a manager or part of the professional staff, types of meetings that occur and comments said in them can give you some signs of a possible company sale. You might notice secret meetings with executive staff that are more frequent and might involve special trips about which leaders are quiet.
These meetings and trips could indicate that the company's owners are meeting with possible buyers that they do not want employees to know about. For meetings you get to attend, you might notice a change in how leaders talk about the business, including mentions of extravagant promises of growth or profitability or talk about financial distress.
Monitor Company Performance
Since an owner might sell a company for either bad or exceptionally high performance, it is helpful to keep track of the firm's financials, growth, performance against competitors and economies of scale. If sales are down, and the company is taking on more debt than usual, this can be one of the signs that the company is in trouble and may go up for sale if the owner does not feel confident in improving the situation.
When competitors are outperforming the company in areas such as economies of scale, reputation or innovation, this can be a sign that the owner might seek a merger with one of them. In cases where the company is growing well and is very financially healthy, interest from third parties might lead to a possible sale.
Listen for Rumors and Comments
It is unlikely that your boss is going to tell you that he is selling the company until the deal has already happened, but listening to talk around the company and in the industry can offer some insight about what might be going on. You might hear fellow employees expressing concern over changes in the company, even if they do not directly say they think it is getting sold. You might also see talks in the news and on the web from people analyzing your company's performance and sharing rumors of a potential sale.
A much less subtle sign is hearing directly from your boss that she is looking into options for the company moving forward. Selling the company might just be one of those options.
More Warning Signs of a Merger
Some additional possible warning signs of a merger or acquisition of which to be aware include:
- Formation of a new company vision.
- Move to focus on a primary business function, like sales or research and development.
- Change in company policies (or lack thereof when change is frequent).
- Change in leadership styles.
- Lack of communication in the workplace.
- Increased stress in the organization.
- Loss of major clients and customers.
- New company hierarchy.
- Changes in employee morale and work environment.
Handling a Possible Company Sale
It is important to note that experiencing one or even several of the signs does not necessarily mean your boss is selling the company. After all, your management may correct financial and performance issues, change business strategies or leverage strengths without giving up the company or merging with another. However, seeing a lot of negative changes might lead you to consider your future employment and your role in the current company.
You might decide that you want to become more involved in helping your company succeed so that you have a good chance of keeping your job if someone buys out your company. However, you should be aware that further restructuring and changes in the work environment can occur after a merger or acquisition. So, job security is not guaranteed, and you might still want to consider other options.
You might decide to polish your resume, begin networking and think about where you would like to work in the future if you are laid off or if you exit your company voluntarily. Collecting some references, assessing your personal strengths and weaknesses and considering your interests can help lead you to your next career opportunity.
- Pasha Law PC: When the Boss Sells the Company
- CFO: What to Do When Your Boss Sells the Company
- Investopedia: Warning Signs of a Company in Trouble
- Norstrem Associates: Signs Your Company Is for Sale and What That Means for You
- Dice: How to Know When Your Startup Is Being Acquired
- Investopedia: Why Successful Businesses Get Acquired