Confidentiality: How to Maintain it During a Business Sale

How can a broker help you maintain confidentiality in a business sale? 

When you decide you’re ready to sell your business you may have concerns about keeping the sale on the down low. If word about the sale gets out among creditors, customers, employees, competitors or vendors, it could trigger a host of negative reactions and unrest and could potentially decrease the value of your business at a time when maintaining its value is a top priority. The most secure way to navigate the sale of your business is to enlist a broker. Brokers have a number of systems in place to safeguard the confidentiality of your transaction.

Using Teaser Descriptions to Market Your Business

When advertising your business for sale, a broker will create a “teaser description” of your business. This description will contain enough information to pique the interest of potential buyers without revealing the identity of your business.

Pursuing Buyer’s Qualifications

After reading your teaser description, when a company or an individual express interest in moving forward in the purchasing process, the next step is to pursue buyer qualification. This means requesting financial information that demonstrates the potential buyer’s ability to secure the purchase of your business. Fortunately, your broker will navigate these waters for you. If the interested party is unable to provide a proof of funds then you are out nothing and the identity of your business is still under wraps. However, if the interested party demonstrates purchasing capability, you can confidently move forward in the process by entering into a confidentiality agreement. 

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Using a Confidentiality Agreement

A confidentiality agreement is a document your broker will have on hand. Once you determine that the interested party is financially-qualified, they will sign the agreement. This signed agreement protects your business if they break confidentiality and it serves as a portal through which you can divulge your business name and other private company information.

Maintaining Open Communication

Throughout this time, your broker will encourage you to maintain open communication with your management team. They will also orchestrate meetings that include your upper-level management. Keeping upper-level management in the know will give them time to mentally prepare for this transition and it will demonstrate that you value them and recognize the value they contribute to your business. It can also help curb the internal spread of rumors regarding the sale.

Creating Blind Methods of Communication

There’s obviously going to be a substantial amount of communication with prospective buyers about the sale of your business. Your broker will create blind methods of communication – email, phone number, voicemail… –  as an easy way to protect the identity of your business.

On account of the level of confidentiality required, holding meetings off-site is a smart way to avoid the rumor mill. Your broker’s office is a safe place to engage in private discussions regarding your transaction.

The sale of a business can be challenging to navigate, particularly where confidentiality is concerned. Enlisting a broker to facilitate the transaction is a wise decision – one that will protect your confidentiality, reduce your stress level and provide immense value throughout your entire transaction.

Do you have questions about buying a business or selling a business, give us a call?  We’re happy to help! We can be reached at 612.331.8392 or by email at info@oibmn.com.

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