There are a number of businesses that will be able to really benefit from making public their sale or acquisition. But for most this is not true. Limiting those who know about the sale to a small circle (especially at first) is a necessary condition which many business owners ignore, and unfortunately with dire consequences.
Confidentiality is exceptionally important in the process of selling businesses. It is important for achieving your own goals as well as the successful and smooth operation of the business after it is sold. Leaked information to creditors, customers, competitors or employees can bring negative consequences to its daily activities, weakening its commercial strength and therefore its value. Furthermore, potential buyers may hesitate before purchasing your business if they feel that sensitive information has been leaked to third parties, considering the consequences that such a situation might bring.
If you sell your business, then there are certain steps that Business Interval, with its skilled associates, can help guide you in following so that exposure to unwanted publicity is minimized during the sale of your business:
- Preparing an agreement which prohibits revealing information
A specific agreement needs to be put together in case a serious buyer wants to learn more information about your business. A specialized lawyer should write it, and it should be signed before revealing any information.
Not providing details or information in advance helps discourage others from identifying your business, unless we are dealing with a buyer with whom we will make an agreement. Equally so, it is important to include in your agreement a clause that ensures confidentiality on both sides, not only during the initial discussion period but also afterward, for a reasonable amount of time, even in case negotiations are unable to move forward.
- Promoting your business using a “blind” advertisement
We should not share our personal contact information or company name when we advertise the sale of our business. We can reveal this information once a confidentiality agreement is signed. A “blind” advertisement with a title that highlights the strong points of the business will draw more interest from buyers than its name. Business Interval specializes in this promotional model through our webpage and only in cases where the seller wants identifying information to be available for their own reasons do we provide it.
- Before deciding to give further information to a buyer, we need to think about whether they fulfil the necessary conditions
When we are selective to whom we reveal information about our business, we ensure a higher level of confidentiality, and we protect our own interests. Asking a potential buyer about their financial background and experience in the business world is of vital importance so that we can be certain that the potential buyer can put forward a realistic offer. Besides, buyers with experience in the market expect these kinds of questions. This is the kind of thing that proves that we are dealing with serious buyers, who are ready to respond to questions such as these and who will be able to take the next step in the process. In fact, most of them understand that, as a seller, you are being careful and know that if they proceed with the purchase, the manner of operation and finances of the business are all information that should be revealed only to the two parties involved.
At Business Interval we possess the specialized training and are able to filter out potential buyers for you so that we know who fulfils the necessary criteria and thus save you valuable time.
- Preparing a bill of sale
Once we have signed a confidentiality agreement (see #1), we know that we are communicating with a serious buyer. Then we can move on to writing the bill of sale. This is a document that you will prepare with our guidance, wherever necessary. Essentially, the bill of sale gives a detailed picture of the business and will mention the reason why this sale is a good future investment. In the footnotes of each page, we state that access to the particular document is exclusively for the individual to whom it was given, that this document is protected by the terms of the confidentiality agreement which was signed, as well as that there will be legal repercussions in case this agreement is violated.
- Signed document with statement of intentions
Revealing information about a business ought to be done in stages. Even if we have signed a confidentiality agreement, we should not reveal information regarding ownership, customer lists, commercial techniques, technologies in use, payment of employees and other sensitive information about our business. Before the process can move forward, the buyer must demonstrate their purchasing ability and intention to submit a realistic offer. This is achieved through the existence of a signed document in which the buyer’s intentions are stated.
- Never meet at the location of your business
After the process has progressed and we have decided to meet with the buyer, all further activities and meetings take place in a neutral place away from the business, e.g., at the offices of Business Interval.
- We limit the number of persons involved
We may need the help of several senior staff members of the business in order to assist us in gathering all of the necessary information, or a buyer may wish to meet the team behind the business. However, it is better if we limit the number of persons involved. We can explain to the buyer the importance of confidentiality at this stage of negotiations.
As we follow these steps, we should remember that providing information about your business should occur within a framework of confidentiality and in stages. We start by publishing a short description of the business in order to promote it. Then, we set the conditions for potential buyers and take all the necessary precautions to ensure confidentiality so that we only reveal further information to serious offers. Attempting to maintain the balance between answering the questions of potential buyers and the need for confidentiality can be difficult, but the appropriate preparation will ensure that the sale goes through smoothly. Besides, we should do everything possible to prevent the many negative consequences that a confidential information leak about the sale of your business can cause.
Business Interval makes use of the tools and techniques proven to yield the best results for all parties involved. The buying and selling of businesses is a very serious process with many dimensions and peculiarities that demand specialized knowledge and experience. You should select the right partners rather than attempting to do everything by yourself since the possibility that you will have good results will be up to luck.
