One of every seller’s biggest concerns during the sale of a company is maintaining confidentiality. Understandably, sellers do not want the word to get out that the company is for sale until the business is sold. Potential leaks could affect employee status, customer loyalty, and revenue.
When handled properly by a qualified business broker, leaks are rarely a concern. Nevertheless, a seller should take certain precautions to avoid any potential leaks and subsequent problems. Here are a few precautions that can be taken to reduce risks during the selling process:
- Enlist the help of a business broker to ensure each potential buyer signs a confidentiality agreement. Business brokers will also make sure potential buyers are qualified to avoid unnecessary questions from unqualified buyers. Keep in mind that more buyer inquiries can lead to more potential confidentiality breaches.
- Reduce the timeline between going to market and closing by gathering all necessary information for the buyer’s due diligence ahead of time. Examples of such paperwork include customer and vendor contracts, leases and real estate records, financial statements and supporting schedules, employment agreements, organization charts and pay schedules, summary of benefit programs, and patents. It’s not uncommon for due diligence examinations to look back 3 to 5 years.
- Make sure employees are conditioned to strangers walking through the facility so that potential buyers on tour won’t raise too many suspicions. This can help you avoid placing yourself in the awkward situation of having to explain the unexpected visitors to valued employees.
- Confidentiality leaks can emanate from many sources. Think through how you will communicate with potential buyers or an intermediary in advance. Emails, fax machines, and UPS/FedEx deliveries occasionally go to the wrong people causing questions and potential leaks.
Utilizing a qualified team of business brokers and intermediaries is key to ensuring confidentiality during a sale. At Regal Consulting Corp., our professional team of business brokers has years of experience helping clients sell businesses in New Jersey, Pennsylvania, New York, and Connecticut. Our expertise, integrity, and marketing tools ensure we price your business appropriately, identify a qualified buyer, and close the deal. Call us today and we can begin with a thorough business valuation and exit plan.