After all of your preparation, you’re finally ready to sell. With high profits and a promising market you’re confident that buyers will be falling all over themselves to get a piece of your business. Blare the trumpets and get that firm out on the market! Right?
Actually, one of the big secrets to selling a business is just that: keep it a secret. The implications of this decision are scary for those that won’t be receiving the trade-off you’re getting. Customers may stop buying from a business during a tricky time period. Competition could take advantage of a precarious situation to spread rumors and dislodge customer loyalty. Employees may fear, and understandably so, for their income. Not all of these mentioned fears are logical, but logical or not they’re real. And they could have resounding repercussions in your business. Discretion has almost never been the cause of a wrecked deal, but broken silence has changed the outcomes of many transactions. What can be done to shield against such breaches?
The primary stepping stone is to trust in some sound guidance. Trained business brokers have the learned experience and tactics necessary to keep secrets quiet, and yet covertly broadcast the sales opportunity to potential buyers. Even if not planning to use a broker, the following guidelines should be followed to complete a successful sale.
- Know the buyer. Doing a background check on prospective purchasers is probably one of the most essential steps in this process. Understand that the majority of respondents to business sales are either just browsing or unqualified. By checking up on those that claim interest you can save yourself a lot of time that would otherwise be wasted.
- When marketing, sometimes discretion is the key. Advertising without blowing the secret is a tough gig. For this reason intermediary like brokers are often used in the most successful of deals. They know the market, and can use vague ads to market a business without disclosing the name or locale.
- Have the right paperwork ready. Following the screening of a buyer, have him or her sign an official NDA or Non-Disclosure Agreement to ensure that confidentiality is respected.
- Steady until the transaction is complete. It is a serious temptation to celebrate before the act is finished. Before the signing of the purchase-and-sale agreement, incremental informational releases communicate a buyer that is trustworthy and legitimately interested in the company.
Even with all of these precautions, rumors will come. A seller who knows people will await questions with prepared answers. Calm humor and wit can calm an anxious crowd. You might mention that quite a few buyers have approached you before, assuring that this one probably won’t be the last. You might even be so bold as to smile and assure that you would never deny hearing a good pitch. If they’ve got one, you’re all ears!
Even if complete discretion is used with the general community, sellers may think about letting a trusted group of employees in on the secret. These are those most probable to guess at a transfer of authority, and disclosing the secret with employees can have both pros and cons. Since uncertainty can tend to exacerbate anxiety, it may be wise to softly reveal your plans to calm hyperbolic imaginations. Once in the know, these employees can be helped to comprehend the need for confidentiality. Their knowledge of the deal could help those that are unprepared when the transfer takes place.
Bradley G. Marlor is a partner and Certified Business Intermediary at Utah Business Consultants, a full-service Business Brokerage and Valuation firm.