The people: who stays, who leaves, and what they're owed

The short version

• The team is a large part of what you are buying. Learn who is essential before you close.
• Find out who plans to stay, who might leave and who the business cannot run without.
• Check what employees are owed: unpaid wages, vacation time, bonuses and any promises the seller made.
• Look for problems that transfer: misclassified workers, overdue payroll taxes and employment disputes.
• Meeting key employees usually comes late in due diligence, with the seller's permission.

Who matters most

Ask the seller to identify:

• Key people: who holds customer relationships, technical skills or licenses.
• Tenure and pay for each role.
• Who could run the business day to day if the owner stepped away.

Lesson B5.5 covers what happens when the owner is the business.

What employees are owed

• Accrued vacation and paid time off. Who pays for it at closing.
• Earned bonuses and commissions not yet paid.
• Retirement and benefit plans, and whether they continue.
• Promises the seller made about raises, bonuses or ownership. Ask directly, and get them in writing.

Problems that can follow you

• Workers classified as contractors who should be employees.
• Unpaid or late payroll taxes.
• Pending claims from current or former employees.
• Union agreements, if any, and what they require of a new owner.
• Immigration paperwork for employees.

In an asset purchase, many of these stay with the seller. In a purchase of the company, they come with it. Lesson B6.6 covers the difference.

Meeting the team

Employees often do not know the business is for sale. Meet key people only when the seller agrees, usually close to closing. Plan the conversation with the seller. Some buyers offer key people a stay bonus to remain through the handover.