When Selling Your Business
Confidentiality Is Key
You've make the big decision to sell. Your books are in order, you've
spiffed up the premises. What are you waiting for?
Many sellers get to this threshold and then become concerned about confidentiality.
They do not want the news of their decision to reach their customers,
competitors, employees, or creditors. After all, they figure, customers
may lose confidence in the business and go elsewhere, competitors might
use this opportunity to spread rumors, employees might fear for their
future security, and creditors might push for earlier payment. Not all
of these qualms are reasonable; however, when selling a business, discretion
is definitely the better part of valor. Few, if any, transactions have
been wrecked due to excessive discretion. A breach of confidentiality,
on the other hand, can severely alter the course of the transaction.
What can you do to protect yourself against this possible deal-wrecker?
Your first step is to look for expert guidance. When a business broker
is involved in the sale, he or she will channel the process to keep the
transaction within safely silent bounds. You can expect your business
intermediary to do the following:
1. Qualify the buyer. Screening potential buyers is one of the most
important benefits a business broker can provide for you. Keep in mind
that roughly 90 percent of those who respond to business-for-sale ads
are either not serious buyers or are not financially qualified. By screening
prospects, the business broker will contribute to confidentiality by
limiting the exposure of the business to the most promising buyers instead
of to the merely curious time-wasters.
2. Use appropriate marketing strategies. How can you advertise a business
for sale without spreading the news too far? The business broker, as
intermediary, is in an ideal position to do just that. Brokers place
advertising and post listings that contain non-specific descriptions
of the business. This "blind ad" approach can be phrased to
attract interest in the business without revealing its name or exact
3. Prepare paperwork designed to promote confidentiality. After screening
prospective buyers and assessing the degree of interest and financial
qualification, the business broker will also require prospects to sign
a strictly-worded confidentiality agreement.
4. Manage appropriate release of information. Until a purchase-and-sale
agreement has been signed, the business broker can phase the release
of information about the business to match the growing evidence of buyer
sincerity and trustworthiness.
However, even with the most careful handling, rumors are unavoidable.
The wise seller will expect questions from the curious and will be ready
with answers. If you find yourself needing to muffle the business-for-sale
buzz, aim for a mix of good sense and good humor. You might respond that
many buyers have approached you over the years, making "news" before
it happens. You could go on to say that you never refuse to listen to
a great offer, adding that you are, in fact, all ears right at that moment!
No matter how close-mouthed sellers choose to be with the community
at large, they might consider being open with their own employees. This
is the group most likely to sense what's happening, and sharing the news
with workers can sometimes be a positive move. Since it's often the unknown
that causes the most anxiety, including employees in the decision to
sell can actually calm over-active imaginations. Once enlightened, workers
can be made to understand the need for discretion. Confidentiality will
help protect their own future as well as that of the business.
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