Selling a business is a complex process that requires careful planning and consideration. As a business owner it is important to understand the procedures that protect you and your business.

One of these complexities is confidentiality. This includes information about your identities, financial position, business plans, intellectual property and/or any piece of information related to the business that you would not wish to be in the public domain.

Why is confidentiality so important during the sale process?

Here are a few reasons to consider:

• Protect the Value of the Business: If confidential information like financial performance or expansion plans about the business is leaked to competitors, it can negatively impact the value of the business. Competitors may use this information to develop strategies to undermine the business, leading to a decrease in revenue and market share.
• Preserve Customer and Employee Relationships: If news of the sale becomes public, it can create uncertainty and anxiety for employees and customers. Employees may start looking for new job opportunities, while customers may begin to look for alternative providers. This can result in a loss of value for the business.
• Upholds the Reputation of the Business: Leaked confidential information can sometimes damage the reputation of the business. This can negatively impact the business’s ability to attract new customers and employees and may also impact future business deals.
• Avoid Legal Issues: In some cases, the disclosure of confidential information can result in legal issues. For example, if the buyer discloses seller’s confidential customer information, they may be in violation of privacy laws.

In order to protect the business, it is vital to share any confidential information under a mutually signed Non-Disclosure Agreement (NDA). “An agreement between seller or prospective buyers that no details about their discussions will be revealed to third parties.”

To maintain confidentiality, it is wise to use an experienced professional adviser who understands the process and will market the business in a confidential manner, whilst providing the right type and amount of information that will attract potential buyers.

Your adviser will protect you from any “fishing” enquiries by having a pre-qualification meeting either virtually or in person, in order to explore the strategic fit between the businesses and the structure of any potential deal.

For further protection it’s advisable to restrict access to a qualified list of potential buyers that have the financial resources to complete a transaction.

Finally, never disclose the price you want to achieve from the sale of your business. It sets expectations and impedes the opportunity to benefit from competitive tension in the sale process.

If you would like to discuss a potential sale of your business and explore the various options available, please contact us on 0118 959 8224 or email Islay Thomson at ithomson@evolutioncbs.co.uk