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A large part of the value of any business is linked with its reputation. However, when an enterprise is put on the market, its good name can be one of the hardest things to protect as the sale process evolves. Rumors may begin to circulate once employees, customers, and suppliers notice a sudden interest from the owner in repairing damaged equipment and spring cleaning and renovating the premises, coupled with 'upstairs' initiatives such as audits and tidying books and records. Whether you're working with an experienced broker or trying to go it alone, your sale plans are one secret you can't afford to mismanage. So here's some confidentiality hacks you're going to need:
Advance preparation of NDA and financials
It's sensible to seek an attorney's advice to set up an appropriate NDA (non-disclosure agreement)
for your proposed sale in good time. Most importantly, this should avoid any risk of disclosing sensitive business data until your interests are properly protected with legally binding obligations on any prospective buyer. And to deter casual buyers and inquisitive rivals alike, you'll want the agreement to spell out the fact that any breach of confidentiality will have legal consequences. This is also the time to gradually get your financial paperwork updated and audited to avoid a tidal wave of financial remedial work that could attract suspicion as sale time approaches.
Screen potential buyers
Screening interested buyers is one practical way of avoiding disclosure leaks. It's also a good reason for involving professionals such as business brokers or business attorneys
who can screen and pre-qualify these people at an early stage. At the very least, you should obtain a letter of intent and ask prospective buyers to disclose their business background information before you reveal the name of your business. Serious buyers will be OK with this. Also, ask them to outline their purchasing capabilities in broad terms.
To conduct the sale process in secrecy, you will need a separate email account for all enquiries from prospective buyers. This should be a non-business facility which allows you to communicate and transfer data as necessary while keeping your identity hidden until you choose to make it known. Similarly, you will also want a private, non-business phone number available for the same purposes. Don't cut corners by using your personal mobile phone, because there's always the chance that messages and voicemails may get linked or re-routed. This could conceivably lead to embarrassing and unplanned messaging contacts with company receptionists and managers, leaving you with some very awkward questions to answer.
The confidential marketing of a business for sale requires a judicious mix of diplomacy and business acumen. This is where a good broker can reveal information step by step to genuine potential buyers of serious intent. Essentially, this means releasing just the right amount of information to the right people at precisely the right time. Going it alone here can be tough: reveal too much and you're left exposed; reveal too little and you'll end up with a business you can't sell.
Meetings on neutral ground
As preliminary negotiations get underway, you should have a neutral venue prepared for meetings and discussions. If you've appointed independent professionals to assist you, then meeting at their offices is an ideal solution. Later on, you may need to arrange out-of-hours visits to your business premises — for instance, when discussing equipment, facilities, and processes.
Disclosure to employees
Even when your secret negotiations are about to pay off, you'll probably reach a stage where some key employees must be brought into the loop. This is one of the trickiest moments in the process, so you should think hard about who needs to know, what they need to know, and when they need to know it. Handling confidentiality well also allows you to 'go public' at a moment of your choosing. You can then offer maximum reassurance to staff, customers, and suppliers, thus creating the right conditions for successful and profitable business continuity. On the other hand, a poorly handled sale and transfer risks the loss of valuable customer goodwill and custom. Key staff may also desert the business if they feel drastic changes have been introduced 'behind their backs' with unseemly haste and without consultation.
By Melanie Luff, Online Journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including PropertySales.com and FranchiseSales.com.