Some businesses benefit from a public sale announcement. For example, famous establishments or historical landmarks could have a higher selling price from such an announcement. However, this approach may not apply to normal businesses. In fact, confidentiality is a necessary part of selling a business and ensuring that the exit strategy stays intact.
There are a number of ways that the announcement of a business could trigger negative responses. For example, the general consensus from creditors or competitors may weaken the business position and its value, leading to unenthusiastic potential buyers from listening or reading from the shared information. Business brokers can help reach the prospects that are needed to sell a business, without mentioning the business name or the owner. However, if you decide to sell your business on your own, there are several steps that should be taken to keep confidentiality.
A Non-Disclosure Agreement (‘an NDA’) is the best way to protect the information concerning the sale of your business, which can be found online or have one created by an attorney. It is vital to not allow information about who you are or the business you intend to sell to leak out before the potential buyer signs the agreement. Make sure to include protection clauses for yourself and the buyer with an expiration date.
It is important to not share personal contact or business information in advertisements when you wish to sell your business. You should only reveal this information once you obtained the confidentiality agreements. Blind ads use headlines that will promote the business’s strength while not mentioning the name. Create a separate email account that is not linked to a business, such as Shop4sellNY@email.com, to show limited information. It is also vital to remember using traditional media areas, such as PO Box. If you choose to list your business for sale on an online site like Vetted Biz, use the site’s protection features to protect the business and your identity. Finally, it would also be a necessary tactic to set up a contact telephone number that has no connection to the business or your name to avoid contacting with competitors.
It is also time-efficient to screen potential buyers in order to protect your confidentiality, such as requesting for their information like their financial and business background. If a qualified buyer is serious about the business purchase, then he or she will be expected to be screened, provide their information, and keep the information about you and your business private.
Once qualified buyers have been identified, and the confidentiality agreement has been signed, you are able to provide them with the selling memorandum with its own unique identification number, which gives out a detailed overview of the business and its positive purchasing aspects, or the offering memorandum. Remember to add in the footer of each page a reminder of the terms of the confidentiality agreement and that violation to comply with the agreement could lead to legal consequences.
It is wise to only provide information concerning the business in steps. Even when the confidentiality agreement is signed, the buyer still must show their ability to purchase the business and provide an offer through a Letter of Intent before any trade secrets or proprietary information can be shared.
It is also a good idea to meet with potential buyers off-site, especially at the office of your attorney or broker to avoid as much suspicion as to who the person is that you are meeting with.
There may come a time where the assistance of a key employee is needed for tasks such as due diligence, so it is important to explain to them the need for confidentiality. The meeting should only take place with the right people and the right number of people to minimize chances of a breach of confidentiality.
Provided the above points, it is still extremely difficult task to sell a business on your own with confidentiality. For business owners that value confidentiality and their time, it is wise to engage the services of a business broker.
Thursday, September 30, 2020
12 PM Eastern Time / 9 AM Pacific Time