It is quite tricky to balance the questions of buyers and retain the confidentiality of your business selling process. Creating a plan can help in setting when and what to information to release. Sometimes, revealing information at a wrong instance can adversely impact both the integrity and confidentiality of your business. Thus, you have to be careful about what information you must provide to your buyers.
Once you begin your business marketing, you will be able to observe changes in your sale. It is quite normal to feel these changes because business sale can reach anywhere you want. However, you should keep your ideas and thoughts only to yourself. A bit of important advice is that you should never reveal too much. It can come back to bite you in the end if you don’t plan beforehand.
Confidentiality is more than just a little important in the sales of both small and medium businesses.
It is also vital in reaching your own exist aims and goals. And it is significant for post-sale success of your business, particularly if you offer seller financing and also agree to receive a minor portion of the purchase price in the form of future payments. But you should keep it in mind that this portion is not substantial. If you do then any delay in future payments will not negatively affect you.
Letting the information out is harmful in several ways. Premature exposure of information can affect the business adversely. Following are some of these ways:
- Employees, creditors, competitors, and customers become hesitant when a business is being sold. It often triggers reactions which can weaken the momentum of your business. It can even affect the value of business.
- The hesitance of prospective buyers increases while purchasing a business if they feel it has no confidentiality. It would affect their decision of purchasing it if they feel that others know sensitive information about it.
- Letting even confidants know about some secrets can launch a chain of gossip. Even if it is unintentional, it will still influence the integrity. If every person tells his close relative or a friend, it can spread the information about your sale intentions. This information can spread even quickly if the word reaches out to your competitors or employees.
Following are the actions which you should take for protecting your sale hopes and business:
Step 1. Advertising your business through listings and blind ads
- You should not share your business or personal name until you have the commitments of your buyers. Until you don’t know whether they are trustworthy or not, you should not share even the minor details. Moreover, you should not offer your own name in for sale advertisements.
- Advertise the strength and nature of your business rather than its name. For instance, you should only tell that the business has a strong base of customers. For starters, this information is more than enough.
- You should direct all responses to an address which will not reveal your business or personal identity. When you are placing advertisements in traditional media, you should use the given P.O. Box. Other than it, you should use the email options which maintain your confidentiality. This will help in ensuring that you are not revealing anything significant. When you are utilizing sites for selling business, use the feature of the site which protects your identity. Otherwise, it can be quite messy to keep your integrity in check.
Step 2. Buyers should be pre-qualified before sharing important and sensitive information.
Actually, if you are feeling awkward in asking a buyer for the business and financial information before giving your business name, you are not unique or alone. However, you should remember:
- Real buyers expect you to conduct screening before you share important information.
- They also seem to care about the confidentiality of your business information. After all, they wish to know that their future business has proper trade secrets or not.
- Buyers with proper qualification are serious shoppers. And they are also ready with the important information for taking the next steps. s
In accordance with the business brokers, only one out of ten buyers is serious. Only one of them has the qualification for making the purchase. That is the reason why pre-qualification has such significance. Without it, you can forget about sharing any type of information. It is better if you learn who is serious enough to purchase the business and who is not. It will do magic in saving your time.
An efficient way of pre-qualifying prospects is describing your response and business requirements. You should explain them in a way which assists unqualified buyers in opting themselves out.
Through the explanation of purchase size and business size, you will have a good chance of hearing from those who really have an interest in it. You can increase the chances if you ask buyers to explain their possible purchase capabilities.
In each and every advertisement, you must ask parties to respond with the information which explains:
- Just what they want from a purchase
- Their timeline of purchase
- An explanation of their related experience
- Their ability and interest in buying your business
In one sentence, you can relay this request. Please respond by explaining your investment capability, size and type of business, your experience, and your interest in this purchase.
Step 3. Make a system of inquiry response which shares information in phases.
There is no need for you to give all important information at once. In fact, providing important information in advertisements can reveal your identity. This way you cannot mask your identity even if you don’t reveal your business name. You can see below how and when to phase the delivery of your information.
Delivery Stage-Business-for-sale ads
A short description of price, size, strength, and type of business.
Request to all interest parties to respond by explaining their purchase qualifications and intentions.
Direct all responses to a blind media collection point, email address, or a P.O. box. Make sure that they don’t reveal your or business name.
You can set up an online listing for requesting confidentiality. For instance, before offering further information, a confidentiality agreement must be signed by the party.
All brokers need buyers to offer non-disclosure agreements and financial capability before obtaining additional data.
Delivery Stage-Email or phone replies to ad respondents
Additional information and personal introduction do not reveal the business name and sensitive information.
You should confirm the timeline, purchase interests, and financial capability.
Provide to fax or email your short-selling summary. However, you should remove references to the identity of your business.
If capability and interest are high, you should request a meeting providing more data.
You should shake hands with the buyer before sharing information. In other words, it means a hand for a hand. Only offer information after you get buyer information.
Delivery Stage-Face-to-Face meeting
You should confirm the capability and interest of the buyer again. It will serve to strengthen your bonds and will also erase your suspicions. After the promise of confidentiality, provide buyer with the selling memo. Before making a promise, you should keep the memo under the table.
Hold an off-site meeting for protecting the identity of your business. Both of the parties should also sign the confidentiality agreement. Your attorney should prepare the agreement beforehand as it will prove to be helpful.
Delivery Stage-Providing selling memo
During this stage, you will provide your selling memo.
You should give the memo to the buyer only after the agreement has been signed. If you are unsure, you should only release the summary of memo.
You should reveal business operations and financial records.
In addition, you should also release a copy of the memo with numbers on all pages.
You should not be jumping around reveal the information. Provide the information after receiving the formal letter of the buyer regarding the purchase of your business.
Step 4. Maintain confidentiality.
You should take the following steps for maintaining privacy during the process of selling:
- Have an agreement of confidentiality ready for presentation to qualified buyers.
It is important to have a confidentiality agreement ready. You can make your attorney prepare it for you. You must make sure that you are including a clause which details about expiration data and mutual confidentiality. Normally, it is only after two years.
- Create a private account for use with buyers.
You should create a separate account for talking with buyers. Otherwise, you face a risk of tipping off workers and causing concerns in the workplace. Instead of it, invite your buyers to offer a confidential email to address of non-business. You should not use the personal name because it can be traced easily. Rather, you should create one which masks your identity. Create an email with a completely different name.
- You should direct calls to a non-personal number and the phone should be answered. Or you can record a voicemail for conveying greetings to business buyers.
You should remember that your personal number may not be right here. After all, you cannot let your competitors, employees, or vendors recognize who you are. Otherwise, it will be enough to wreak havoc on your firm.
- Even after the agreement of confidentiality, don’t share financial details, client lists, trade secrets, and proprietary processes until you have an intent letter in your hand.
It is likely that your sale offering has the cash flow of owner and annual revenues. It might even have the asking price. You should refrain from sharing financial information until you know that the buyer really is going to purchase the business.
- You must be ready for questions from associates and workers.
It is possible to tell the truth without having to spill the beans. It is really easy to say that you are creating an exit plan for ensuring the business’s future stability. You can also say that you are communicating with potential successors or partiers without announcing that they will replace you in the near time. Whenever someone asks you about your decision, you should be clam while ensuring that you are actually telling the truth.
Facing people can be quite difficult but you have to keep your composure. Practice how you reveal the information before actually providing enough data.