When to Tell Employees About Acquisition Discussions — And How Much to Share
For founders and CEOs navigating the early stages of M&A, one of the most delicate decisions is when — and how — to inform employees that the company is in acquisition discussions. Share too early, and you risk unnecessary anxiety, distraction, or even attrition. Wait too long, and you may damage trust or lose control of the narrative. Striking the right balance is both an art and a strategic imperative.
This article explores the timing, messaging, and depth of disclosure around M&A conversations, with a focus on software and technology companies. Whether you’re in preliminary talks or approaching a signed LOI, understanding how to manage internal communications can preserve morale, protect deal value, and position your team for a successful transition.
Why Timing Matters in M&A Communications
Acquisition discussions are inherently uncertain. Many deals never make it past the initial exploratory phase. According to PwC, nearly 50% of announced M&A deals fail to close. Prematurely disclosing a potential transaction can create unnecessary turbulence — especially in high-talent environments like SaaS, where key engineers or sales leaders may interpret the news as a signal to explore other opportunities.
At the same time, withholding information for too long can backfire. If employees hear about the deal from external sources — or worse, from a leaked investor memo — it can erode trust and damage your internal culture. The goal is to communicate with transparency, but only when the information is actionable and the outcome reasonably likely.
Three Phases of Disclosure
At iMerge, we often advise clients to think about employee communication in three distinct phases:
1. Pre-LOI (Letter of Intent): Keep It Confidential
During early-stage discussions — exploratory calls, data room prep, or initial valuation modeling — it’s generally best to limit knowledge of the process to a small, need-to-know circle. This typically includes the CEO, CFO, and perhaps a trusted legal or corporate development advisor. In some cases, a key technical or operational leader may be looped in to support diligence preparation.
Why? Because at this stage, the probability of a deal closing is still low, and the risk of distraction or rumor is high. As we noted in Completing Due Diligence Before the LOI, buyers are still forming their view of the business, and any internal instability can negatively impact valuation or deal confidence.
2. Post-LOI, Pre-Close: Selective Disclosure
Once a Letter of Intent is signed, the deal enters a more serious phase. Due diligence intensifies, legal documents are drafted, and integration planning may begin. At this point, it’s often necessary to inform a broader group of employees — particularly those who will be involved in diligence, such as finance, HR, or IT leaders.
However, this is still not the time for a company-wide announcement. The deal is not yet closed, and surprises can still derail the process. Instead, consider a tiered communication strategy:
- Tier 1: Executive team and key functional leaders (involved in diligence)
- Tier 2: Department heads or team leads (as needed for integration planning)
- Tier 3: Broader employee base (only after closing is imminent or complete)
In this phase, messaging should emphasize continuity, confidentiality, and the strategic rationale for the deal. Avoid overpromising outcomes or speculating on changes to roles, compensation, or culture — especially if those details are still being negotiated.
3. Post-Close: Full Transparency
Once the deal is signed and closed, it’s time for a company-wide announcement. This is your opportunity to shape the narrative, celebrate the milestone, and set expectations for the future. The most effective post-close communications include:
- A clear explanation of why the deal happened and what it means for the company
- Reassurance about job security, benefits, and reporting structures (if applicable)
- Introduction of the acquiring company’s leadership and vision
- Next steps for integration, including timelines and points of contact
In our experience advising software companies through exits, the most successful transitions are those where leadership is visible, empathetic, and proactive in addressing employee concerns. As we discussed in Sell Website: Success After The Closing, the post-close period is critical for retaining talent and maintaining operational momentum.
How Much Should You Share?
The level of detail you provide should be calibrated to the audience and the stage of the deal. Here’s a general framework:
| Audience | Timing | What to Share |
|---|---|---|
| Executive Team | Pre-LOI | Full context, deal rationale, buyer profile, valuation range |
| Key Functional Leaders | Post-LOI | Deal status, diligence needs, confidentiality expectations |
| All Employees | Post-Close | Strategic rationale, leadership changes, integration plans |
In all cases, avoid speculation. If you don’t know how the deal will affect a specific team or role, say so — and commit to providing updates as information becomes available. Overcommunication is better than silence, but only when the facts are clear and the message is consistent.
Special Considerations for Software and Tech Companies
In high-growth SaaS or cloud businesses, employee retention is often a key driver of deal value. Acquirers may place significant weight on the continuity of engineering, product, or customer success teams. In some cases, earn-outs or retention bonuses may be structured to incentivize key personnel post-close.
That’s why firms like iMerge often work closely with founders to identify “key people risk” early in the process and develop communication strategies that align with both deal execution and cultural continuity. For more on this, see What’s the Best Way to Handle Key Person Risk Before Selling?.
Final Thoughts
There’s no one-size-fits-all answer to when and how to tell your employees about an acquisition. But the guiding principles are clear: protect confidentiality early, communicate intentionally as the deal progresses, and lead with transparency once the outcome is certain. Done well, internal communication can be a source of strength — not stress — during a transformative moment for your company.
Founders navigating valuation or deal structuring decisions can benefit from iMerge’s experience in software and tech exits — reach out for guidance tailored to your situation.
