One important consideration when selling your business is who can derail the process and cause delays. While a delay can cost you money, the greater concern is that it can cause potential buyers to walk away because they won’t court reputational risk. One technique to manage this is to build a Stakeholder Engagement Plan.

A Stakeholder Engagement Plan is particularly important if your sale is controversial or likely to generate media coverage. Most businesses take a more haphazard approach to managing stakeholders through the sale process. This approach runs the risk of not anticipating the issues and motivations of people who can influence the sale process. Anticipating the issues helps keep the process on track and deliver a faster, smoother sale.

Who Are Stakeholders?

• Stakeholders are people, groups or organizations that have an interest or concern in your organization.

Stakeholders can affect or be affected by your company’s actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees, the government, shareholders, suppliers, unions and the community where your business operates.

An example of a negative impact on a stakeholder is when a local environmental group protests against the sale of a local mine. This negatively affects the community and is likely to generate media coverage. In some cases, potential buyers will lose interest as they won’t want to be implicated in a negative media situation. They may not want your business enough to risk the reputational damage.

An example of a positive impact on a stakeholder is when the customers, shareholders or bankers all agree that a change of control is a positive for your business.

What is A Stakeholder Engagement Process?

• A Stakeholder Engagement Process is the way a company involves people who may be affected by its sale or can influence the outcome of that process. 

A Stakeholder Engagement Process is generally used to:

• Improve communications
• Obtain wider community support or buy-in
• Gather views
• Enhance
reputation
• Make the sale process easier.

Why Undertake a Stakeholder Engagement Process?

You may wonder why you need to formalise your Stakeholder Engagement Process as most companies think they can juggle all the parties involved. The reality is, companies tend to be internally focussed and do not understand who could influence the sale process – or who could be motivated to derail it. Key reasons to consider your developing a Stakeholder Engagement Process are:

• Early identification of potential issues, conflicts and motivations
• Help build alliances
• Defuse conflicts that can impede the process
• Change or impact policy
• Build local support and goodwill
• Increase community support
• Improve working relationships
• Improve perceptions of your company
• Gain agreement and buy-in of a project.

Conclusion

A sale is more likely to succeed if it takes into consideration the environment in which it operates. Stakeholder engagement could be viewed as a form of risk management. This is crucial in the sale process as stakeholder issues can disengage a buyer.  The buyer may not want to manage disengaged employees, community concerns, poor government relations or negative media coverage.