Selling a business confidentially

Last updated: December 2020 | 5 min read

When selling a company, there are a variety of things that the owner will need to consider – with the importance of privacy being one of them.

There are quite a few reasons why a confidential sale can be beneficial for those looking to exchangetheir firm for cash– the main one being that they can help to offer owners a sense of privacy. Whether you’re worried about alarming your staff or you don’t want the competition to know what you’re planning to do, it can be a great idea to protect the identity of your business while it’s on the market.

Before you decide, you should take the time to learn more about privatedeals and how they differ from regular ones, and ultimately if this will be the right choice for you.

How do these types of transactions work?

Those who have never heard of confidential transactions may be wondering how it’s possible to do this, since getting notice and potential buyers will often require some form of public advertisement – and many may not fully understand why keeping a level of secrecy can be important.

Here are a few of the things that make them different to an ordinary sale:

Blind advertisement– To offer the seller some privacy, this method of listing will often limit the information that is given in advertisements, i.e. the name of the company, photographs of the property, or any specific details of the premises. It will typically need some specs, like the type of business, the size, strength, and overall value (as well as asking price).

A non-disclosure agreement – Anyone who is considering looking further into the offer will need to sign a non-disclosure agreement (NDA), which will legally prevent them from sharing the details of the corporation or transaction with anyone outside of it. You can approve to give an interested individual a copy of your sales details, which can be an important factor in winning them over to buy.

An inquiry system – Not all buyers are as serious as you might want them to be – all you have to do is look at the stats from most ad responses to see that the majority of these individuals aren’t actually qualified to buy. Because of this, an inquiry system can be an excellent choice. For example, when you are contacted about your blind advertisement, you can ask questions like “what are your qualifications?” or “do you have any experience in running this type of business?”. The answers to these should give you a better understanding of what type of buyer they are.

Why keep it a secret?

Some people may be unsure if this is the ideal option for them – but in most cases, an individual who’s worried that public advertisement of the firm being sold could harm the company’s performance should consider the benefits of being discreet.

The whole situation can be worrisome for staff, since new ownership can sometimes come with a number of changes. The very idea of a transfer could have a negative effect on overall income, suppliers, and clients, too. While you’re trying to sell, these are certainly things that you’re going to want to avoid, as they can quickly turn potential buyers away.

Keeping selling information away from the competition can be especially important, since this can lead them to start preparing new strategies based around your actions. As more people in the industry know that you’re trading the company away, the value can drop and the opposition can gain the customers that you once had.

Selling is often considered a sign that you’re in trouble or are having problems– and whether this is true or not, you may not want your competitors to have an opinion that they could potentially share. Fewer people will want to do business with a failing company, one that has secret issues, or even one that seemingly has either. Secrecy can be the key to continuing the usual daily work, bringing in more customers, and overall maintainingthe value of the corporation.

Is it right for you?

Every enterprise is unique – and overall, the owner is the only person who can determine whether or not a confidential transaction is worth it. With a better idea of the pros and cons, you’re likely to know what will be best for your unique requirements.

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