The idea on how to #sell a business is based on #confidentiality, It is important to most owners. In fact it is often the very first question a potential seller will ask. Confidentiality provides a challenge for business brokers as we need to find interested buyers without telling them what it is we are selling!
Not quite, as there are a number of relationships that can be drastically affected.
- Customer Relationships: If customers learn of a potential sale, they may start thinking of other companies they should do business with instead, especially if their relationship is with the owner and not the business as a whole.
- Employee Relationships: Employees should only know about a sale when the timing is right. If word leaks and staff learn of a sale too soon, they may get nervous about job security, culture change or other facets and jump ship.
- Competitor Relationships: It is important that competition not know of the business for sale as you don’t want them to gain the opportunity to inform your customers or vendors. On the other hand, competition can be a viable purchaser of the business. A broker is able to approach competitors anonymously and ensure that a signed confidentiality agreement protects the client from damage.
One thing to keep in mind on #how to sell a business idea, that it can take 6 to 18 months to sell a business, it is important to keep operations as normal and as profitable as possible during this time and minimize any interruptions that may occur from a leak to any of the above relationships.
In order to do that, we have a specific process we follow to ensure confidentiality is maintained when working with business sellers. The following list is the broad steps we follow with buyers to protect the seller’s confidentiality:
- Fill out buyer registration form
- Sign company-specific confidentiality agreement
- Receive initial information package on the business
- Discuss interest
- Make an offer/draft a letter of intent
- Due diligence. Detailed access to all corporate and financial records.
- Final agreement & closing.