Making the decision to sell your business can be such a relief–it’s tempting to shout it from the rooftops. However, we strongly recommend that you don’t do that!
It’s especially important that your employees don’t find out about the sale too soon, as it can lead to chaos. No matter how you break the news, employees tend to assume their job is in jeopardy. And having an experienced staff in place can really help your company to sell, so you want your workers to stick around now more than ever.
One of the major keys to a seamless sale is confidentiality, not only with employees, but with everyone. If word gets out before the deal goes through, this can lead to disgruntled customers, suppliers, and creditors, in addition to employees. It’s important to keep these relationships peaceful, in order to ensure a fluid transition.
Six Tips for Keeping Your Business Sale Confidential
- Involve as Few Employees as You Can: While you shouldn’t send out a company-wide memo by any means, it’s often necessary for 1 or 2 key employees to be involved with the sale. Your buyer may want to meet them, or you may need help getting things together. However, these employees need to be aware of the importance of confidentiality, and the number of employees in-the-know should be kept to the bare minimum. Many business owners end up selling their business to an employee, which can be a good or bad thing. Check out our past post for a pros and cons list.
- Prepare a Confidentiality Agreement: Before you speak with would-be buyers, you should make sure that they sign a confidentiality agreement. Make certain that the agreement withholds any information that could reveal your business.
- Prepare a Selling Memorandum: This is what you will show your prospective buyer after the confidentiality agreement has been signed. It’s a good idea to give each agreement a unique number, usually in the footer of the document, so you can keep track of each one.
- Set Up New Contact Information: It’s a good idea to set up a phone number and email that aren’t associated with your business. That way, you can communicate with potential buyers while keeping your identity confidential.
- Don’t Share Details Until You Have a Letter of Intent: You should release information on your business to prospective buyers in phases. Details like client lists, financial details, and trade secrets should be held until the last possible moment.
- Work with a Broker: Most importantly, it’s a good idea to work with a business broker. Marketing your business as for sale without revealing your business is, of course, quite a challenge. But not for a business broker! They will help you prepare the documents listed above, plus, they can vet phone calls from prospective buyers, keeping your business name a secret.
For assistance with selling your business, contact The Bridlebrook Group. We are experienced in confidential business sales.