Keeping a business sale confidential
How to explore a sale without unsettling your staff, customers or competitors.
By The fear that word will get out stops many owners from exploring a sale at all. It is a reasonable fear. Staff can worry about their jobs, customers can wonder about service and competitors can use the news against you. With a little planning, you can keep things quiet until the time is right.
Share information in stages
Early conversations do not need customer names, staff details or full accounts. Summaries and ranges are enough to work out whether there is a fit.
More detail comes later, once there is a written indication of terms and a confidentiality agreement in place.
If a buyer asks for everything upfront, that is a reason to slow down.
Use a confidentiality agreement
A confidentiality agreement, sometimes called an NDA, sets out what the buyer can do with your information and what happens if talks end. Your solicitor can provide one or review the buyer's.
A signed agreement helps, but it does not replace common sense. Only share what is needed at each stage.
Keep the practical details quiet
Meet away from the business, or after hours. Use a personal email address or a separate folder for sale documents.
Give the project a dull name. If a buyer needs to see the site, arrange it as a normal visit.
Think about who in your business handles your mail, email and calendar, and whether they might see something.
Plan the announcement
There will come a point when key staff and customers need to know. Plan it with the buyer so the message is consistent, timely and delivered by the right person.
People take news better when they hear it clearly and early from you than from a rumour.
Tie announcements to real milestones, such as signed contracts, rather than hopes.
Your checklist
What to do next
- Decide what you will share at each stage
- Get a confidentiality agreement reviewed by your solicitor
- Keep sale documents in one private place
- Meet off-site or out of hours
- Plan who tells staff and customers, and when
Example
An HVAC owner met a buyer at a café on three occasions before sharing any figures. Detailed information was shared through a private folder after a confidentiality agreement was signed. Staff were told the week contracts were exchanged, with the buyer present to answer questions.
An illustrative example, not a real client or transaction.
Questions owners ask
Will you sign my confidentiality agreement?+
Yes. I'm happy to sign a reasonable confidentiality agreement before you share anything sensitive, and I'd expect my own advisers to be bound by it too.
When should I tell my staff?+
Usually once there is real certainty, and with a plan for their questions. Talk timing through with your adviser.
What if someone finds out early?+
Be honest without over-sharing. Something like: I'm thinking about the future of the business and I'll keep you informed. It's better than a denial that later proves false.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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