Understanding Confidentiality for Business Sales

By | November 18, 2018

The issue of confidentiality comes up early in the discussion about selling a business.

Who do you tell, will it hurt business, will you lose employees, will your credit lines get reduced, will vendors abandon you…..in short, will it hurt the sale of your company and it”s selling price if people know you are selling your business. There is no simple answer because every business is different and the business & personal dynamics at play are unique to every environment.

In general, I find that in the early stages it is best to keep it as confidential as possible….makes the selling process a little more difficult but an experienced broker knows how to maintain confidentiality and get the business the exposure it needs to get sold.

Confidential listings are called blind listings. Think of them as generic….not able to determine exact business by reading the ad. If the business is fairly unique the description for location can be broadened to the state, county or region it’s in. The purpose of the listing is to attract a potential buyer by piquing their interest….nothing more.

When a potential buyer makes an inquiry they will be required to sign an Non-Disclosure Agreement (NDA) before any details are known to them.

The signed NDA usually results in a discussion between the potential buyer and the broker. The conversation will be in general terms and may include a written introductory summary.

At this point if the potential buyer is still interested, they will be screened to determine if they are a good candidate to purchase the business and capable of completing the transaction. If they are, basic financial information will be made available and a meeting with the seller to tour facility and learn more about the operation will be arranged.

When a “buyer” has made a written offer and decides to move forward, you might want to include key personnel in discussions as they will be key to a successful transition and you don’t want to blindside them. Offers have contingencies, meaning you are in the process of selling but not necessarily going to close the sale.

Maintaining confidentiality is the 1st of many roles of the business broker.

To learn more about the process of selling, see our main website Twelve Steps of Selling Your Business.

Managing Broker-Intermediary

Richard Roberts, ABI is the Senior Managing Broker at AEGIS Business Brokers, LLC and holds an Accredited Business Intermediary classification by the American Business Brokers Association and is a member of the International Business Brokers Association, International Franchise Professionals Group, Chambers of Commerce, Committees and Volunteer Organizations. Contact Richard at 479.689.4455 Ext 11 or richard@aegis-email.com.

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