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FAQs About Confidentiality, Advertising and Disclosures

FAQs About Confidentiality, Advertising and Disclosures

 


How will the business be advertised and marketed?

We will create a blind description of the business which is posted to the top internet business-for-sale marketplaces.  The description will provide enough information to entice prospective buyers to inquire for further information, but not enough to enable them to identify the business available for acquisition.  Our policy is to have the business owner “sign off” on our proposed blind description so you know exactly what is being communicated prior to buyers signing a non-disclosure agreement  (NDA).

In addition, We will contact qualified individuals from our database of buyers who have previously inquired about businesses for sale.  We will use the same blind description.

We will not release enough information to enable a buyer to identify the specific business until we have a signed NDA.

 


How do you maintain confidentiality while marketing the business?

Before releasing enough information to a buyer to enable them to identify the business, we obtain a signed non-disclosure agreement (NDA), which essentially swears them to secrecy.

Prior to obtaining a NDA from buyer, we use blind descriptions of the business which are approved by the business owner (seller).  Please see the response to the previous question.

 


Can the business be up for sale without my employees, vendors, customers and competitors finding out?

Our procedures are sufficient to maintain confidentiality.

Often when confidentially breaches occur, the cause can be traced back to sellers themselves.  It is very important for sellers to minimize informing others of their decision to sell a business.  You must have 100% confidence that a person can be trusted to refrain from mentioning your intent to anyone else.  Whenever you share your decision, you absolutely must stress the importance of maintaining confidentiality.  If you are not extremely careful with whom you share your intent, you can accidentally create a rumor that can spread like wildfire.

We urge you to read this article, Confidentiality Breach and Employee Suspicion, from the How to Plan and Sell a Business website.

 


How can I sell the business without anyone knowing?

We do it all the time.  Maintaining confidentiality is of utmost importance and we have procedures in place that accomplish the goal.

Much of the responsibility for maintaining confidentiality falls on the seller himself, and any acquaintances he informs of his intent.  Please read the response to the previous question to learn more.

 


When should I tell my employees I am selling the business?

In almost all instances, it’s best not to tell the employees until after the business sale has been successfully closed.

All employees experience anxiety about the unknown, in this case the potential buyer and what actions a new owner may take.  If your staff learns about a possible sale of the business, a few might start to look for some other place of employment.  Worse yet, it’s possible that they may speak with your competition to check out employment opportunities and mention the sale of your company as his or her motive for exploring other opportunities!

Some prospective buyers may request to speak with your staff while in the due diligence stage.  It’s best to attempt to persuade the purchaser that employee meetings will not be allowed prior to closing.  Until closing actually occurs, there is no such thing as 100% certainty that a business sale will close.   Most of the time a buyer can be convinced to forget about that request.  If you are forced to capitulate, any meetings with employees ought not be held until such time as almost every other contingency to closing has been completed.

 


When should I tell everyone about the sale of my business?

You should maintain the confidentiality of an anticipated sale all the way up to the day the transaction closes, and even then, only after it closes on that day!

Please read this article, Confidentiality Breach and Employee Suspicion, from the How to Plan and Sell a Business website, to learn of some of the perils of a confidentiality breach.

 


What kind of disclosures about the business do I have to provide to a buyer?

You should disclose anything that you are aware of that might have a detrimental effect on the future viability of the business.  Upfront disclosures can be discussed, addressed and minimized.  If they scare a buyer away, rest assured that buyer would have never closed on the transaction anyway.

Upfront disclosures help earn trust with a buyer.  That trust factor can be a significant asset in the latter stages of the delicate negotiations that occur as a transaction nears closing.

When owners fail to disclose problems, they will usually surface in the due diligence stage and have a severe detrimental effect on trust issues, which often leads to a terminated transaction.  In addition, the definitive documents, which transfer the business from the seller to the buyer, will contain certain representations and warranties that could result in seller liability for any undisclosed problems that arise after closing.

For more information, please read this article, Trust Issues from Inadequate Disclosures before Due Diligence, from the How to Plan and Sell a Business website.

 

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If you have a question, send an email to jim@bizowneradvisors.com.

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