InSight

Exit and Growth Strategies for Middle Market Businesses

Confidentiality is Key in Selling Your Business

By Gerald W. Lindsay | Sep 13, 2011

Once my business is on the market my competition will find out.

Selling Business Myths – Part 5

Business PlanningConfidentiality is a key in selling your business.  Many sellers worry that their customers or competitors will find out they are for sale and that it will have a negative impact on the business.  Customers could lose confidence in the company’s ability to perform.  And, competitors could use this information to their advantage.

Here is how your Investment Banker will work to keep your selling process confidential:

Non Disclosure Agreement

All prospective buyers will be required to sign a carefully worded Non-Disclosure Agreement (NDA) prior to receiving any identifying information on the company.  The NDA will protect you from a prospective buyer discussing the potential sale of your company with anyone outside their advisor group.

Qualify the Buyer

Your Agent knows how to qualify and work with prospective buyers.  I spend large portions of each and every day talking to buyers.  During each conversation, I am gauging the prospects financial qualifications, capabilities to complete a transaction and their motivation to act.  If we are only working with qualified buyers, the tire-kickers are eliminated and so is a good amount of the “rumor mill”.

Release of Confidential Information

Once a competitor has signed an NDA, your Agent will be able to gauge when it’s appropriate in the decision making process to reveal the more secretive aspects of your company’s operations.  Not everything needs to be provided up front for prospective buyers to make informed decisions.

 

 

Posted by Gerald Lindsay.


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