Selling Your Company Confidentially

Owners of companies sometimes make mistakes when selling their businesses. One of the most serious is the failure to maintain confidentiality during a transaction. Breaching confidentiality during a sale process can kill the potential deal, jeapordizing the value of the business.

The sale of your company must remain confidential: only a limited few should know about a sale before it occurs. While a sale can often be positive outcome for all, customers, employees, and suppliers can and do react negatively to the leaked news of a sale.

Unfortunately, the uncertainty of a potential sale is very difficult to deal with if the news becomes public.

Customers become less likely to conduct business with companies that they know are for sale because of the uncertainty of new ownership. Will they like doing business with the new owner? Will the service or product change? Will the company continue to provide the same service or products?

Employees will, unfortunately, fear the loss of their job when they suspect a potential change in ownership. Realistically, quite the opposite is true. In most transactions, buyers want the vast majority of employees to remain to provide stability to the business. If employees become aware of an impending sale, they may quit, leaving the business less attractive to buyers.

Vendors additionally may be wary of a sale given the uncertainty surrounding the identity of a buyer. If news of a sale reaches vendors, they may be reluctant to provide additional goods or services, fearing potential economic or similar problems.

During the crucial moments of a sale, an owner will not want any commotion from any of its key stakeholders. Maintaining secrecy through the sale process is the key.

How do you ensure confidentiality of the sale of your business?

The first step is to retain an experienced M&A advisor. Merger professionals are highly concerned with maintaining confidentiality. Without confidentiality it is very difficult to complete a transaction. Professional advisors can market your company with discretion; generating interest in your company without identifying your identity in the business community. Additionally, they meet and screen potential buyers to ensure these buyers are truly qualified and interested, before specific information about your company starts to be revealed. Lastly, experienced M&A professionals will ensure that all communications throughout the sale process are confidential, so that only people with a "need to know" learn of the possible sale.

Although business owners can try to maintain high levels of confidentiality without outside assistance, it is difficult to do so. Whether or not the owner has the training to handle a transaction confidentially, owners can breach confidentiality simply by making a phone call or sending an e-mail. Consequently, hiring a skilled merger professional can be a great benefit to the sale of your company.