Selling Your Business to Retire?
Confidentiality is Critical to Maximize Your Value
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 market share, helps you command a good price for your company. A breach in confidentiality can create havoc for a seller trying to sell it for the highest possible value.
If the word slips out that you are looking to sell your business, rumors start, which can make your employees feel anxious and worry about their future. They may look for new jobs and share the business sale rumor with your customers. This could trigger a negative reaction, and your customers might start looking for another business to work with, which can negatively impact your financials.
Competing businesses may use the sale against you. Even worse, prospective buyers may hesitate to purchase your business if they feel sensitive information has been shared with others.
All of these events can damage your integrity and devalue your business. What can you do?
Here are some tips to help minimize the potential for confidentiality breaches while selling your business.
1. Silence is Golden
Do not disclose you are selling to ANYONE until you absolutely have to. This includes employees, vendors, and customers. Disclose only your advisers, such as your attorney, accountant, financial planner, and business broker. You never know what might happen before ownership is officially transferred, 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.
2. Use Confidentiality and Non-Disclosure Agreements
A confidentiality agreement, also known as a non-disclosure agreement (NDA), is a legally binding document that outlines the critical terms of confidentiality in detail. Confidentiality agreements are routine in the business world and ensure that prospective buyers will not reveal your intent to sell or any other sensitive information related to your business. They will provide you with legal protections if the potential buyer does so. Working with an experienced business advisor like Transworld Business Advisors ensures that all portions of your sale are covered by a confidentiality agreement.
3. Use a Business Broker
Our office takes a two-pronged approach to maintaining confidentiality. Before we list a business for sale, we discuss it with the seller and get a clear understanding of who their competitors are and who they do NOT want us to contact or disclose confidential information to. When potential buyers contact us, we require that they fill out a non-disclosure agreement before disclosing any confidential information. This separates the serious buyers from the curious, saving you time and money and reducing the risk of breaching confidentiality.
4. Less is More
Your broker is a professional with experience handling confidential and sensitive information. Don't divulge information too quickly. Be aware of your surroundings when conversing about the sale to ensure that others aren’t within earshot and overhear you.
We understand that selling a business relies heavily on confidentiality and professionalism, and we have successfully ensured that even the most public of companies are sold without prior public knowledge. Our confidential and professional advisors will provide peace of mind so you know that confidentiality is treated with the utmost respect and professionalism. If you are considering selling your business and retiring, contact us today and speak to someone you can trust.
