Shhh! Business sale confidentiality is a big part of a successful sale.
One of the most important reasons a Vendor engages a business broker is to keep their secret, invoking the broker’s business sale confidentiality. Certainly in small markets, competitive industries and smaller communities it is important to protect your business secrets and qualify a potential buyer before you send out any information.
There are businesses we can market openly, and many (but not all) franchises fall into that category. In some cases the owner doesn’t feel it is a problem. In most cases though, business owners would not want the business name to be revealed in any circumstance.
How would you go about selling a secret? There are a couple of steps a good Business Broker would take to ensure a potential buyer is a qualified purchaser, before sending any information;
- We discuss business sale confidentiality with our client (the business owner) and line out the expectations and our processes. Once we understand your business we can make a recommendation. Different strategies might be used dependent on your industry.
- We design a compelling marketing campaign that reflects the performance of the business and highlights all the strengths and opportunities without disclosing any information that could identify the business. We would leave out any geographical reference and use generic images. Click here for an example. We had lots of response to this ad. It sold within a month and a half!
- Any potential buyer must complete and sign a business sale Confidentiality Agreement. Among other hings this agreement requires the buyer not to share any of the information with anyone else and under no circumstances to approach the vendor, any employees, suppliers or customers.
- In most cases the potential buyer requires to have a face to face meeting with the broker before the name and location are shared with the buyer. The meeting will help the broker to assess the suitability of the purchaser, establish if they can afford to purchase the business and whether there is any conflict of confidentiality (i.e. when the purchaser is currently also a competitor or customer)
- Depending on the complexity or sensitivity of the information, a broker could choose to release information in stages. Some information might be withheld until the broker is satisfied that the purchaser is likely to proceed.
- Once a purchaser is ready to make an offer we draft a Sale & Purchase agreement. This agreement typically include a period of Due Diligence and a time frame of when certain information will be made available in the process.
- During Due Diligence the purchaser is typically supplied with more detailed information that may include suppliers and customers, but in some cases this is also withheld until every other aspect of the Due Diligence is satisfied.
- If the purchaser does not proceed they are obliged under the CA to return ALL documentation to the broker for destruction. All digital files should be removed from any device.
- If the Purchaser would like to enquire on another business, the broker will require them to sign a new business sale Confidentiality Agreement, specific for that business and start the process from the start.
Selling a business can be a complex and detailed process with plenty of opportunities to make mistakes along the way. We take the process extremely seriously and business sale confidentiality is a big part of a successful sale. Our reputation depends on this process and our clients demand it. For these reasons we will often decline to work on a general agency agreement where other brokerages are also instructed to represent the sale of a business. If other brokerages operate without the same strict procedures, confidentiality can and does get breached and it will be out of our control.
FREE LINK Northland downloads:
FREE Booklet outlining the sales process: Managing The Sale of Your Business
FREE Booklet outlining other options to an Exit Strategy