Confidentiality is an important factor in the successful sale of any business and should be taken seriously. Preserving the value-adding aspects of your business like your customer base, relationships with reliable vendors, experienced employees, and your market share helps you command a good price for your company. A breech in confidentiality can create havoc for a seller trying to sell it for the highest possible value. Unfortunately, in many cases, when the word slips out that you are looking to sell your business, people can't help but talk. And that is when the rumors start, which can spread as quick as wildfire. It's human nature to resist change. The rumors may start to make your employees feel anxious and worry about their future. They may start looking for new jobs and also share the concerns of the business sale with your customers. This could trigger a negative reaction and your customers might start looking for another business to work with. When customers and employees leave, this can reduce your sales creating a drop in your financials that a buyer will surely question. Competing businesses may use your sale against you. Moreover, prospective buyers may become hesitant about purchasing your business if they feel sensitive information has been shared with others. All of these events can damage the integrity of your business and devalue your business for the new owner. What can you do? Transworld Business Advisors offers some tips to help minimize the potential for your confidentiality to be breached during the process of selling your business.
- Silence is golden. Do not disclose you are selling to ANYONE until you absolutely have to. This includes employees, vendors, and customers. Disclose only to your advisers such as your attorney, accountant, financial planner, or business broker. You never know what might happen before ownership is officially transferred over and it's not worth the stress and strain of worried and panicked employees to make announcements prematurely. Only disclose the sale to your employees, vendors, and customers after the sale has been finalized.
- Use a business broker. When a potential seller calls a broker, the broker knows exactly what questions to ask to determine if the prospect is serious or just curious. The biggest threat to a breach of confidentiality are with curious prospects that are really nosy and love a good rumor — especially if it is about their competitor. A seasoned broker like Transworld Business Advisors can separate the serious buyers from the curious, saving you time and money in the process.
- Less is more. Don't divulge information too quickly. Keep your marketing package simple. It should give a buyer just enough to decide whether they want to take the next step. Ensure that no confidential information is being shared that could be used by others against you, including competitors.
- Use confidentiality and non-disclosure agreements. A confidentiality agreement, also known as a non-disclosure agreement (NDA), is an absolutely necessary document to have ready when selling your business. This legally binding document outlines the critical terms of confidentiality in detail. Confidentiality agreements are routine in the business world and your request will not surprise a good buyer. Confidentiality agreements ensure that prospective buyers will not reveal your intent to sell or any other sensitive information related to your business and will provide you with legal protections if the potential buyer does so. Working with an experienced business advisor like Transworld Business Advisors will ensure that you go into negotiations with a carefully crafted confidentiality agreement.
