When considering selling your business, it is crucial that the potential sale remains confidential. Having employees, customers and vendors learn of a possible sale can have devastating consequences on the business. For instance, customers may leave, employees may seek out other opportunities and the valuation of your business may decrease. These problems may weaken your bargaining position as you negotiate with potential buyers. In order to protect your confidentiality throughout the entire process of selling your business, it is best to work with a business advisor. Confidentiality is arguably the most critical issue for a business advisor as we work on this process with business owners. Here, we discuss some of the tips we give our clients to ensure the potential sale remains confidential during the process.
Using a blind listing
Obviously, your broker needs to entice potential buyers by letting them know your business is for sale. But how do you advertise a business without putting up a ""for sale"" sign at your business's location?The key is to use a blind listing. These online profiles provide just enough information — including business type, size, strength, price, general location, number of employees and a helpful description of the business — without using a business name, personal name or any details that would allow potential buyers to ""reverse engineer"" your business's identity. When constructing a blind listing, it is good to put yourself in the position of a prospective buyer and ask yourself whether certain details would expose your business's identity. The profile should provide details that generate interest without compromising the confidentiality of your business sale. Transworld's collection of listings offers some great examples of blind listings.As with other strategies for maintaining confidentiality when selling your business, working with a business advisor is the best way to make the most of blind advertising. A business advisor provides a central hub of listings for prospective buyers to browse, ensuring you get the exposure you need when selling your business. Additionally, working with a business advisor solves the logistical problem of having to set up an unlinked phone number, email address and voicemail along with other privacy measures that take extraordinary planning and execution. Also working with Transworld affords another excuse if you are approached by employees or vendors asking if your business is for sale. Since Transworld helps businesses franchise their business, a seller can simply state that they are pursuing expansion plans and are seeking buyers and investors.
Qualify prospective buyers
To maintain confidentiality, you need to get in touch with the right buyers. There is no need to share your business information with more people than necessary. In order to limit the number of people who may receive further details about your business, and when they receive that information, you and your business advisor can use the screening method of qualifying buyers before sharing additional information. In this part of the business selling process, you ensure that interested buyers responding to your listing have the necessary purchasing capabilities. Screening prospective buyers also allows you to determine prospective buyers' motives, credentials and level of seriousness. Any trustworthy potential buyer will be happy to share information about their buying capabilities. If the buyer clearly cannot afford to purchase your business, there is no need to take the next step of sharing more information or revealing your identity.
Use a confidentiality agreement
A confidentiality agreement, also known as a non-disclosure agreement (NDA), is an absolutely necessary document to have ready when selling your business. This critical document outlines your terms of confidentiality in detail, ensuring that prospective buyers who sign it will not reveal your intent to sell or any other sensitive information related to your business. In most cases, the buyer will sign the document before they even know your business's identity.Working with an experienced business advisor will ensure that you go into negotiations with a carefully crafted confidentiality agreement.
Knowing when to give out information
There are stages to every transaction and it is crucial to give out limited information at each stage. As a buyer goes through the sale process, more information can be provided. Often times the most sensitive information will not be provided until the due diligence stage once a contract has been negotiated and in extreme cases, some information can be held to post closing.
Contact a Trusted Business Advisor
In order to utilise these tips conveniently and effectively, contact a business advisor. Business advisors like Transworld, which maintains one of the strictest privacy policies in the business, will keep your sale confidential at every step, offer the utmost expertise in valuing your business, and ensure that you get the best price possible.