“How can I keep people from finding out my business is for sale?’ is the most common question I get after, “what is my business worth?” I’ve sold my own business so I fully appreciate how nerve-racking the process can be. Like me, most business owners want the process kept top-secret until after the transaction closes. Business owners are usually terrified that if word leaks out their business is for sale, they’ll lose a key employee, an important customer, or worse yet, a competitor will use the news for nefarious purposes.
If you are thinking about selling your business, you should interview several business brokers and ask them among other things the specific steps they take to ensure confidentiality. I don’t know what other brokers do, but here’s the two-stage process we at the Tennessee Valley Group go through when handling the sale of a business …..
- We require an airtight Non-Disclosure Agreement. We never reveal the name of the business being sold, much less sensitive financial data about the business, until the potential buyer has signed a Non-Disclosure Agreement.
- We only deal with serious potential buyers. In my experience, breaches of confidentiality usually come from tire kickers who will sign an NDA then once they reviewed sensitive data will spread it around like cheap mulch. The way we attempt to minimize this is to only deal with serious potential buyers. If a potential buyer will not tell you how much liquid cash they have available, if they will not tell you a good reason they are interested in a particular deal, if they will not provide references as to their business credibility, we don’t consider them serious potential buyers.
But what happens if confidential information about your business does indeed slip out? Will it affect the sale? Will it hurt the business? While it may surprise you, the answer to these questions is usually “no.” More times than not, a breach of confidentiality, while annoying, will not hurt the selling process or your business. That is not to say you should ignore processes to maintain confidentiality. But, there is a reality when it comes to selling your business, and that is a number of people will have to know about it as you go through the process of hiring a broker to the day of closing on the transaction. People being people, that’s where the problems start.
That’s the bad news but here’s the good news about the impact of a breach of confidentiality:
If your employees like their job, they aren’t likely to jump ship because you might be selling your business. Let me bring you in on a secret, most employees are less attached to the business owner than the business owner thinks; employees are more likely attached to the work and to the paycheck, than to you. When employees hear the business is for sale, they will of course be nervous about the impact on their job stability. You need to assure your employees the buyer will want a functioning, operating business with a stable employee base, and with that perspective, the employees will usually be OK.
While there are exceptions to every rule, customers care less about who owns the business than they care about how the business helps them. Said this way, if the customer is getting a good service/product from the business, who owns the business is of little consequence. If your customers hear your business is for sale, they will stay with your business provided it continues to deliver the value proposition that brought them to your business in the first place.
Do you control what your competitors say about you? Have they/can they say negative things about you that aren’t true? The point being, whether your business is for sale or not for sale, your competitor might be saying terrible things about you anyway! Heck, they might be saying worse things than “that business is for sale.” Suffice it to say, I am completely unaffected by concerns about what my competitors might say about me. If I am providing a great service/product for my customers and my employees feel fulfilled in their jobs, then whatever they (customers or employees) hear from a competitor will be like water off a duck’s back, of no consequence.
The professionals at the Tennessee Valley Group, Inc. are deeply committed to maintaining confidentiality in the process of selling your business. That’s why we go to extraordinary lengths to preserve confidentiality. But as with most things in life, the fear of what might happen is usually worse than the reality of those things happening.
Tennessee Valley Group
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