Discretion can be challenging during the sale of a business, especially when competitors are potential buyers. If an owner shares too much, a bidder could use that information against them; if they share too little, it may scare away potential buyers. While it’s always best to work with a business broker, these tips will help business owners ensure confidentiality during a sale.  Here are some ways of maintaining confidentiality while selling a business.

Prepare Blind Listings

There are a few ways to ensure confidentiality while getting the business’ information in potential buyers’ hands. Blind listings offer enough data to create interest without publicizing the company’s identity. Most buyers want to know the company’s industry, size, description, cash flow, and location. When creating a listing, consider whether details may reveal the company’s identity.

Put Customers and Clients at Ease

Customers are like everyone else—they prefer to see the same sales team members, products, and ordering processes. When clients hear of an impending change in ownership, they often worry about rising prices, different purchase methods, and a decline in service quality. While these concerns may seem inconsequential to some, they’re crucial considerations for owners and business brokers in Austin.

When a sale is upcoming, it’s only natural for customers and clients to wonder how it will affect them. To stop the rumor mill and preserve confidentiality, business owners should take steps to reassure their valued customers.

Sign a Confidentiality Agreement

Confidentiality and non-disclosure agreements (NDA’s) are sometimes seen as ineffectual, but that’s not always the case. Strong agreements compel companies, advisors, and employees to keep information private throughout the process. Agreements should cover elements such as:

• Not discussing the sale with the acquiring company’s employees
• Not discussing the acquiring company with outsiders
• Not divulging details of the sale to customers and vendors

People tend to be more selective about the information they share when consequences affect them instead of the entire company. With a strong confidentiality agreement, it is easier to keep sales private.  Maintaining confidentiality while selling a business is made a bit easier after signing an NDA.

Redact Crucial Information

Another way to keep sensitive information out of competitors’ hands is to redact certain parts. It could be as easy as deleting customers’ and products names and using generic placeholders. For purchase contracts, pricing lists, employee names, and other elements can be redacted.

Selectively revealing information allows owners to show their companies’ value and performance without losing any of their intellectual property rights. Again, it’s a matter of balancing the need to share information with the desire to keep things private. A broker’s advice, along with redaction, will help sellers maintain confidentiality.

Use Online Data Rooms Wisely

Running an efficient merger and acquisition process by maintaining information in a data room does much to ensure confidentiality. Online data rooms should be able to monitor who is seeing documents, when they’re being viewed, and how often they’re accessed.

A secure data room allows for view-only access to documents, preventing them from being printed or saved. These restrictions can protect lease agreements, contracts, and other sensitive documents during a business sale.

Protect the Company’s Reputation

In the business world, a company is only as good as its reputation. When confidentiality breaches occur during sales, the word gets around quickly—and the company’s reputation will inevitably suffer. A breach may keep a company owner from closing a deal, and it may prevent potential business buyers from accessing future mergers and acquisitions.

In either case, others will be reluctant to work with an organization that doesn’t follow honorable principles. While it is difficult for owners to trust others to behave ethically during a sale, professional reputation is a powerful motivator that tends to keep business buyers and sellers honest.

Don’t Divulge Information Too Early

The signing of a purchase agreement doesn’t negate the need for privacy and confidentiality. Buyers and sellers should agree on when workers, customers, and suppliers will be informed of an upcoming sale. While it may be necessary to bring key players into the process early on, it is usually better to wait until the transaction is finalized to notify employees. Things can go wrong at any time and deals often fall apart. In these cases, it’s best for vendors, employees, and clients to be uninformed until the last minute.

Verify Buyers and Release Information Gradually

Business brokers typically vet potential buyers by asking them for a substantial amount of information. Requesting personal or company financial statements will help brokers and their clients determine if a potential buyer is able to acquire a business. It will eliminate curiosity seekers and those who simply want to learn more about a competitor. Once a letter of intent has been signed by the buyer and the seller, provide information gradually, with the most important matters being discussed immediately before the deal is closed.

Prepare and Number Deal Memos

Once an owner determines that a buyer is qualified and the non-disclosure or confidentiality agreement has been signed, a sale memorandum with a tracking number is a necessity. These documents offer a thorough overview of a company and its value. Sometimes referred to as offering memos, confidential description books, and selling memos, sale memos should fall under the terms of the confidentiality agreement—and there should be consequences for breaches.

Consider Who May Tip Their Hand

Those who don’t understand the importance of discretion, as well as those with good but mistaken intentions, are most likely to breach the confidentiality of a business sale. Friends and family are common sources of leaks, as these matters are often discussed in closed quarters. However, relatives and acquaintances should be made aware of the consequences of divulging such information.

Rely on a Competent, Connected Business Broker

The most effective way to ensure a confidential business sale is to allow a business broker to manage the process. Business brokers can guide clients through the points on this list, ensuring that information is shared on a need-to-know basis.

The help and support of a professional, experienced broker will streamline the sale process and help an owner maximize the sale value of their company.  Maintaining confidentiality while selling a business is a must and some simple guidelines will keep it quiet.