Additional Tips

The Importance of Confidentiality

Confidentiality is essential to the sale of a business. The sales process requires owners to reveal sensitive and personal information to numerous third parties. Maintaining the confidentiality of a proposed transaction is essential to avoiding disruptions in any business and thus maintaining its value. Not only is confidentiality important to the seller, but it’s also important to the eventual new owner (i.e., buyer) of a business, as confidentiality breaches can continue to harm the business even after a new owner has taken over. It’s, therefore, in your best interest to assist the seller in maintaining confidentiality.

Respect the Need for Confidentiality

Respect the seller’s desire to keep the sale confidential and communicate the importance of confidentiality to all parties involved, such as your investors, your professional advisors, your spouse if they may overhear conversations, or any partners you may have. Obtain written permission from the seller before disclosing any information regarding the business to any other parties and request that those parties review the terms of the NDA and are willing to be bound by them, as you will be responsible for any breaches committed by your representatives.

The Implications of a Confidentiality Breach

Maintaining confidentiality prevents customers, suppliers, and employees from worrying unnecessarily about the future of the business and exploring alternatives. If it becomes known that a company is for sale before it’s publicly announced, its reputation can be negatively affected, and revenue may decline as a result. Competitors may leverage the information to poach clients, customers may decide to do business elsewhere, and employees may experience uncertainty and make plans to leave the company.

Limit Who You Contact

Any interactions about the sale should be limited to the owners, Morgan & Westfield, and the seller’s professional advisors (e.g., attorney, accountant, etc.). Management or employees may not be aware of a proposed transaction, and inside knowledge of the sale could disrupt the business or interfere with the owner’s plans.