"I can't believe it! I decide to sell my business and
the next day it seems that half the city knows I'm
trying to sell. What affect will that information
have on my employees, vendors competitors and
customers?"
 This is a real concern
of owners once they
decide to sell. The
next thing they know
everyone in the free
world knows their
intentions. How does
that happen and how
can it be prevented?
In order to make the
best possible decisions
for their families,
their companies, and
themselves, owners
must talk about their
plans to sell with
informed and experienced professionals. They need
factual information about how the exit planning and
sale or transfer processes work. They need expert
guidance about whether their company is poised to
command top dollar and information about market
conditions for sales in their industries. And finally,
owners need help sorting through all of the emotional
issues that surround the departure from their companies.
Expert Guidance
Experienced transaction advisors (attorneys, investment
bankers, etc.) provide the input owners need on a
confidential basis. Nothing that an owner discusses
with the transaction advisor leaves the room without that
owner's express consent.
Information leaks seldom originate with your advisory
team. They know the importance of confidentiality.
They understand that a breach of confidentiality on their
part will affect not just your business, but their reputations
in the community.
The confidentiality problem does not lie with your advisors
How then does an owner maintain confidentiality once the
information-gathering process ends and the sale process
begins?
Should you decide to use an Investment Banker,
they will contact interested buyers and
disseminate information about your company to parties
known and unknown. To safeguard your confidentiality,
screen the potential buyer list, removing competitors
or companies with whom you do business. Make sure that
initial marketing efforts to potential purchasers do
not identify your business by name. Finally, require
interested, qualified buyers (of your un-named company)
to sign strong and binding confidentiality agreements
before learning the identity of your business or any
confidential information.
Like any other contract, a confidentiality agreement is not
bulletproof
To make it as strong as possible it:
1) should be written by your transaction attorney (not the
buyer's!); and
2) must precede any disclosure of information.
Good investment bankers do not send out blanket mailings. They carefully identify and pre-screen targets before
making a first contact.
All of these safeguards are in place to protect you, the owner
They protect you from the consequences mentioned above:
nervous customers, jumpy employees and opportunistic
competitors. All the scrupulously maintained barriers in the
world, however, cannot shield an owner from the
most dangerous threat to confidentiality—the owner's own
mouth. In the few cases when confidentiality is breached,
the leak generally originates with the owner. He or she just
couldn't maintain silence until the deal closed.
Let that be a warning to the loose-lipped. But let it also
reassure the vast majority of owners: if you can control your
own conversations, you can control the confidentiality of
the entire sale process. |
