Many business owners who try to sell their own businesses in the Houston area have found it challenging to keep the potential sale confidential. However, keeping the fact that your business is for sale quiet is extremely important for many reasons.
For example, if customers know your business is for sale, they may consider moving their account to your competition out of concern that they will not receive the same level of service or quality from a new owner. If your employees find out that your business is for sale, they may seek employment elsewhere, thinking their jobs are not secure. If your vendors find out that your business is for sale, they may try to change your pricing structure because they might think that you are no longer a dependable customer. And if your competition finds out that your business is for sale, they may decide to make that known to the public – including your customers and vendors – seeing the potential sale as an opportunity to take your market share.
However, total confidentiality about the sale of your business is achievable when you use a qualified business broker. These trained professionals will work through inquiries from potential buyers and reach out to them without mentioning your business’s name. They know just what to say to increase interest without saying too much.
Below are some tips to keep in mind when you are trying to keep your business sale confidential:
- When advertising your business for sale, do not give away your personal contact information or the business name.
Although this may seem obvious, careless mistakes are often made in ads but these are avoidable. Create a separate email account with a non-business email address. If using online business-for-sale sites, make sure you use the site’s identity-protecting features. Purchase a phone number that is not associated or connected with your business or with you, personally. Always use that phone line, not your personal cell phone or business line, to make outbound calls to prospective buyers and to receive inbound calls from them as well.
- Prospective buyers should be prequalified before getting access to sensitive information about your business.
Thoroughly screening prospective buyers helps keep your sale confidential. Prospective buyers should be prepared to answer questions about their financial and business background; do not hesitate to ask. Your ad can require inquiries to provide information, i.e., their qualifications, purchase intentions, etc. This will help discourage unqualified buyers from responding. Before you speak to these potential buyers, have a form ready to note information about them in an organized way and a script to help you answer questions without sacrificing confidentiality.
- Consider using a Non-Disclosure Agreement (NDA).
You should have this ready to present to qualified buyers. Although you can find some samples online, it is best to have it reviewed by or prepared by an attorney. And if you will be using an NDA, be careful not to provide any details of information that could identify your business prior to getting a signature on the NDA from the prospective buyer. Your NDA should have a clause ensuring confidentiality from both parties as well as an expiration date for the agreement.
- Create a selling memorandum, or an offering memorandum, and number each copy.
After determining someone is a qualified buyer and having them sign your NDA, share your selling memorandum with them. Each copy you share you should be uniquely numbered to help you monitor who has access to this information. Each page should include a clear reminder that their access to this document is governed by the signed NDA and any break to this will incur legal consequences.
- All meetings should be held off-site, not at your business or home.
When meeting with prospective buyers, be sure to meet on neutral ground, never at the business you are selling. Your broker, attorney or accountant can host the meeting at their place of business.
- Less is more when it comes to who is involved.
You will likely need help from key members of your staff to gather documentation, contracts, etc. but only bring in those who are absolutely necessary. It would also be prudent to remind them of the necessity for confidentiality.
Transworld Business Advisors of Houston guarantees your privacy and is prepared to walk you through the process of confidentially listing your business for sale. We are backed by the Transworld network of professionals and resources that has specialized in business sales for more than 35 years and our team of brokers includes some of the most sophisticated and experienced in the industry. When you are ready to sell your business, Transworld Business Advisors of Houston focuses on your specific industry to find the right buyer all while maintaining your confidentiality.
