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Confidentiality
Critical to Business Sale
As
you prepare to put your house on the market, you get
the word out to as many people as possible.
You want everyone to know your house is for
sale.
However,
just the opposite is true when selling a
business. Letting
everyone know creates an air of uncertainty
that can be detrimental to your bottom line and put
the company in jeopardy.
To
increase the likelihood of a successful sale of a
business at an optimum price, keep it
confidential!
What's
likely to happen if people find out the business is
up for sale?
Employees
get nervous. They
begin to worry if their jobs will disappear or if
they will get along with a new owner.
They will start looking for jobs that make
them feel more secure, and some may even quit before
you have a chance to reassure them.
Losing
key people is serious, particularly during the sale
process. Key
staff members provide valuable continuity and
business knowledge that buyers are looking for.
Lose them and potential buyers may be lost
too.
Customers
begin to wonder.
They
may become concerned whether the business has
problems that could threaten their supply chain.
They may start questioning if they'll get the
same quality from the new owner.
Competitors
will spread the word.
Once
the competition finds out, rest assured they will
let your customers know and use it as ammunition to
bring that business to their company.
It opens the door for them to steal business
from you.
Vendors
and creditors may tighten terms.
You
may be working with terms of net 45 or more to
benefit your own cash flow.
But once creditors learn that the business is
for sale, you may find those terms tightening or
notes unexpectedly called due.
On
average, a business sale takes nine months to one
year. If
even some of these changes occur early on, the
impact can be dramatic.
You will find that you are not only running a
business, but you are busy putting out fires.
A
buyer wants a successful operation with few changes
until he or she can make those changes.
Too many question marks translates to greater
risk and lower purchase offers.
Confidentiality
is crucial no matter the size of the company or the
type of business.
To maintain confidentiality, use a
professional who understands the process - use an
intermediary. An
intermediary will market the business in a
confidential manner, while providing just enough
information to attract the buyers you are looking
for.
The
intermediary should be diligent in screening
inquiries to be sure competitors are not out there
fishing for details.
The intermediary should only be sharing your
identity after determining that a potential buyer is
seriously interested and is pre-screened.
Those serious and pre-screened buyers should
also be required to sign a binding confidentiality
agreement that holds them accountable for leaking
information.
You
want to maintain your business as usual for as long
as possible. Keeping the sale confidential until the
time is right will help you to minimize uncertainty
and maximize the sale.
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