Buying a Company with Existing Employees

Matthew Brunstrum is an M&A advisor for Sun Acquisitions in Chicago. In this position, Matthew Brunstrum handles diverse listings, including offers that include real estate and existing employees. 

Some buyers may prefer that a company comes with essential employees already in place. However, this brings extra considerations to the sales process. Here are a few strategies for acquiring a company with existing employees:

Meet with key employees. Essential employees usually have the knowledge or hold a credential that is required to run the company. Buyers must interview these employees as part of their due diligence to ensure that the company is viable and compliant with regulations. This usually takes place late in the negotiation process.

Consider an agreement. Buyers have the option to propose contracts that obligate employees to work for the new company. Some experts advise buyers to empirically analyze the contributions of key employees before they offer these agreements.

Implement a retention program. A transition can be a difficult time for existing employees. If not managed properly, the change can trigger an exodus of skilled workers. Buyers can create a retention program with incentives, such as money and benefits, that encourage employees to stick with the new company.