There are many issues that require careful consideration so that the value of the business remains unaffected while the sale process is carried out.
A business known to be for sale can raise suspicions among several important groups of people. Employees wonder about job security and may look for new positions.
Suppliers become concerned about getting paid for their latest invoices and can tighten credit terms. Competitors reach for their phones to contact every customer of the business they know of to offer an ‘unbeatable deal’ to change supplier.
Nothing spreads quicker than the news that a business is for sale, and it can become a real problem for the vendor as well as for the agent handling the sale transaction. It can certainly make it difficult for the buyers and advisors to establish the fair market value of the business.
All parties involved should take extreme care to keep the fact of the business being sold closely guarded to those who need to know. Information disclosed by the owner must be treated as highly confidential and will not be released unless the owner’s permission has been received and it can be made known without compromising aspects of the sale.
Professional advisors are rarely the source of leaks about a business coming onto the market. It’s too important for their professional standing to put at risk their ability to keep things under wraps until the appropriate time. The problem can usually be found in the buyer’s or seller’s ranks.
One important safeguard is that the name of the business should not be mentioned in the context of marketing it. Instead, an accurate summary of the key points about the business is used to capture the attention of prospective purchasers without giving away enough to allow the identification of the seller.
Prospective buyers can be asked to sign a confidentiality agreement (also called a non-disclosure agreement) before any further details are revealed.
The list of prospective buyers will be carefully checked so that direct competitors can be identified and won’t benefit from some critical market knowledge.
The underlying aim of all this confidentiality is to retain the value of the business as a going concern, and that includes the stability of its employees and the company’s position in the market.
When marketing your business Jamieson takes every precaution in dealing only with prospective buyers who sign our standard confidentiality agreement. This brief document has stood the test of time and has not been breached in the course of many transactions over the years. Call us and let Jamieson help you sell your business and benefit from our professional advice based on over 25 years experience.