- Keeping the sale of your business a secret from your employees and customers will, usually, lead to a quicker sale, with fewer complications and for a higher price.
- A lack of confidentiality can affect the business buyer
Some steps you should consider –
- Use an Investment Banker. When a prospect speaks to an investment banker, the banker knows exactly what questions to ask to determine if the prospect is serious or curious. The biggest breaches of confidentiality are with curious prospects that are really nosy and love a good rumor – especially if it about their competitor.
- Mums the word. Do not disclose you are selling to ANYONE (employees, vendors, customers) until you absolutely have to. If you are a private company, only disclose to your employees, vendors and customers after the deal is done and you are introducing the new owner. You will need to disclose only to your advisers, such as your attorney, accountant, financial planner, etc.
- Less is more. Do not include information that could be used against you if it was in the hands of a competitor. Once your broker has created the marketing package, review it carefully to assure that no confidential information is shared that could be used by others against you. For example, if you were using a specific raw product that a competitor would not know, don’t disclose this in the package. Although business brokers work hard to manage who gets the information, it is impossible to stop unethical behavior from happening.
- Have a do not show list. Provide a list of people in your industry that you would not want to sell to. This could be competitors, employees, vendors, or others. This will allow your broker to recognize someone that might be looking for confidential information and not truly serious about buying. Often competitors are smart enough not to tell you their real name, but when a broker is involved they feel safe using a real name since the broker won’t know them. This list will allow your broker to identify a possible person that might be more curious about business with little real interest to buy and can help prevent a breach of confidentiality.