Keeping the Business Sale Confidential

Posted 02-23-2015 10:44 am by

When it comes to selling a business, maintaining confidentiality is critical to the success of the sale.  You do not want suppliers to find out that your business is for sale and potentially cause them to change their terms on you, or employees to find out and potentially cause them to search for jobs elsewhere. 

To keep the sale of the business confidential, here are 4 guidelines to follow:

1. Use the right type of broker.  It can be difficult to maintain confidentiality when the business owner is running the business and trying to sell it at the same time, which is why many business owners choose to hire a broker.  Unfortunately, hiring the wrong broker can be just as detrimental.  A lot of brokers who sell residential or commercial real estate are not trained to maintain confidentiality.  In fact, putting up a “For Sale” sign in front of the property is an important advertising source for many brokers.  To properly maintain confidentiality of the business sale, you should use an experienced business broker who deals with highly confidential transactions everyday. 

2. Use non-disclosure agreements.  An important strategy in maintaining confidentiality is to have legal recourse should potential buyers disclose the fact that your business is for sale.  Prior to releasing information that identifies which business is for sale, all potential buyers should sign a confidentiality and non-disclosure agreement.

3. Advertise confidentially.  To inform potential buyers that a business purchase opportunity is available, the advertising must be specific enough to make the opportunity attractive, yet vague enough that potential buyers cannot discern which business is for sale.  Success in confidential advertisement requires research into the marketplace, knowledge of the types of information that should and should not be disclosed, and an understanding of the business operations. 

4. Qualify buyers.  Due to the confidential nature of business sales, all buyers should go through a qualification process prior to finding out the name and address of the business for sale.  Buyers also need to be trained on confidentiality protocols during site visits and be warned about the consequences of violation so that maximum confidentiality can be maintained.

Aaron Muller is a business broker in Washington State who has sold over 120 companies and facilitated over 40 SBA loans for his clients. Contact Aaron at (425) 766-3940 to inquire about selling your business.

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