If you are thinking about selling your business, then we probably don’t need to tell you that keeping the fact that your business is for sale under wraps is incredibly important. We call this hush-hush practice in the business market confidentiality, and for many business sellers keeping your sale a secret means the difference between a successful sale and major financial upheaval.
What can happen if confidentiality gets breached? We’ve seen an entire staff – or key members of the staff – immediately quit and take their regular customers with them. We’ve seen contract clients cancel their contracts, vendors pull agreements and even the competition move in for the kill – all things that would be dreadful for your bottom line at the same time you are trying to leverage that bottom line for a good price from buyers.
How does confidentiality get breached? There are basically two ways this happens. One is careless marketing, and as far as this type of breach is concerned, it is 100% preventable. If you hire someone like a real estate agent or a careless business broker to sell you business, you’d better believe the word is going to get out. We see businesses listed on sites like Loopnet or the general MLS, complete with pictures of the business signage that would allow anyone with an internet connection to know your business is for sale. This type of marketing almost always ends in complete disaster and can even be the kiss of death for a business. The other confidentiality breach happens when someone has loose lips, like a seller telling the woman sitting next to him on a plane that his business is for sale – only to learn later she was the wife of his biggest competitor. For the most part (with very careful attention by a good broker in the form of confidentiality discussions with all parties involved) this kind of breach can usually be avoided as well.
How do I prevent disaster and keep my business sale confidential? Hire the right help. We would never post a business somewhere online where anyone could see it. Our business listings are necessarily vague, and are listed on appropriate sites like BizBuySell. We would never post pictures of a business either, especially those with any identifying information in them. What we do instead is put together a comprehensive multi-media marketing package – complete with financial information, photographs, videos (if appropriate), web links and the like – but only give that information to individuals who have fulfilled our confidentiality requirements.
What are our confidentiality requirements? First and foremost, anyone who wants the name and location of your business disclosed must sign the appropriate non-disclosure (NDA) agreements. We also make sure anyone who signs an NDA is properly vetted to ensure they aren’t someone you want kept out of the loop (like current or former employees, for example) and that they are a serious buyer. We also discuss the importance of confidentiality and the repercussions of breaching the NDA with everyone who signs it.
If your broker just answers every webform and email query they receive by automatically shooting back an NDA with no real knowledge of who they are sending it to – is that careless behavior what you want for your business? Hopefully not. Contact us today to find out more about how we can confidentially market your business.
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907