When do you tell vendors that the business was sold?
January 16, 2024
by a searcher in United States
Hi all - I’m about to close on a very small deal. The business was created 40 years ago and the current owner has strong relationships with the vendors and customers. The owner said that they’d like to tell their contacts that the business was sold so they can “see what we need to do” to transition the relationships.
I won’t be in the business day-to-day because it’s not big enough to support my salary requirements. But the people in the business now will be (except the owner of course). Should I participate in these conversations? Should I lead them (so to speak)? Should the existing staff that will be managing the relationships going forward be involved? When should you have the conversations? Immediately after the close?
It’s also important that I retain the working capital that they have (ie, AP). Is there any risk the vendors won’t work with me?
Thanks for your advice.
from Indiana University in Atlanta, GA, USA
1. As the owner, even if you're not involved in the day to day, you're going to want to be able to step in and fill a role any time in case an employee leaves or has to be out on vacation. Otherwise, you're putting yourself at high key-man risk, where if one person leaves, you could go out of business
2. As the owner, regardless of your role in operations, you're still ultimately in charge, and have authority to make any changes to the business at any time. As such, any customer or vendor is going to appreciate having some level of relationship with you. It shows that you value them and will be attentive to their needs.
These considerations are more important the smaller the business. So for something small like you're describing, I'd say it's absolutely crucial.
from Wake Forest University in Winston-Salem, NC, USA