The importance of confidentiality when selling a business cannot be overstated. Business reputation, operational disruption and anxiety among stakeholders are real risks if news gets out. Keeping a lid on a potential sale is vital to ensuring a successful and smooth transition of ownership.
Why Keep the News Secret?
Business Value – When word gets out that a company is for sale, it can create uncertainty among employees, customers, suppliers, and competitors. Key stakeholders may start exploring other options or demanding concessions due to the perceived instability.
Operational Continuity – If employees discover that their workplace is up for sale, they may become anxious about their job security and start looking for new opportunities. This can lead to a loss of talent, decreased productivity, and disruption in day-to-day operations.
Maintaining Crucial Relationships – Customer and supplier relationships may be at risk if they learn that a business is changing hands. Concerns around the stability and reliability of products or services may lead to a loss of customers.
Competitive Advantage – If your competitors learn that you’re selling your business, they may take advantage of the situation by poaching your customers or employees. By maintaining confidentiality, you can prevent competitors from exploiting the situation and protect your business’s competitive position.
Sensitive Information – The process of a business sale requires disclosing financial and operational information to potential buyers. It’s imperative that this sensitive information remains confidential to protect the business’ interests.
How to Ensure Confidentiality
The first thing you should do is form a small team of trusted people from within the business and restrict access to any sensitive information – this may be limited to just the shareholders/ Directors. Only those who need to know about the potential sale should be included and consider using a code name for the project. You should be clear about who shares confidential information with the buyer. Virtual data rooms are useful for reviewing activity, particularly during due diligence. Also ensure that sensitive meetings are not published on shared online calendars and be extra vigilant with email communication.
When it comes to engaging specialist advisors to support the deal, choose wisely. After a conversation or meeting, decide if they have the right experience, seem trustworthy, and if you feel you could work closely with them throughout the deal process.
Talk to an Expert
To find out more about how The MGroup Corporate Finance team can help support your business sale, please contact Partner Geoff Pinder for a confidential discussion: g.pinder@themgroup.co.uk or 07717 874 357.