Confidential Sales Explained

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Confidential Sales Explained
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One of the most frequently asked questions we get from our vendors is: “can I sell my business without other people finding out?”

Perhaps you don’t want to worry your staff or you’re wary of your competition finding out.

A confidential sale works to protect your business' identity from those you don’t want to be in the know – but how is it different from a regular sale, and is it the best thing for you?

Read on to find out what a confidential sale involves and whether it's the right choice for you.

How Does a Confidential Sale Work?

A confidential sale works differently to a regular sale as follows:

1. Tailored Online Advertisement

On your initial online advertisement, the amount of information available will be limited.

Any key features that could point back to your business won’t be displayed at this stage, including; specific location details, photographs of the premises, and anything else that may be unique to just you.

2. NDA

From here, any interested parties will have to sign a legally binding non-disclosure agreement (or NDA).

This means they aren’t allowed to share details of the sale with anyone else.

3. Approve Your Potential Buyers

With your approval, any interested parties who have signed an NDA will the receive a copy of your full sales details.

This provides them with all the information they need to buy your business.

Hand putting down signature on white paper with pen

Here's the deal:

Confidential Sales offer a great level of privacy, but they aren't appropriate for everyone and can even damage some business sales.

Continue reading to decide which is the right path for you.

Is a Confidential Sale the Right Approach for You?

A Confidential Sale offers a mix of pros and cons that make it appropriate for certain businesses, but detrimental to others.

A Confidential Sale is suitable when...

  • You're worried that public knowledge of your business sale could have a detrimental effect on your business’s performance.
  • Your staff would become worried about a potential new owner coming in and what this could mean for their future.
  • You're in an industry where the knowledge of a transfer of ownership could lead to the loss of clients or suppliers.

A Confidential Sale might not be suitable if...

You're worried about the effect it could have on marketing your business:

  •  Requiring an NDA is an extra step between your business and your potential buyers.
  • Whilst we would like to think that any serious buyers would still come through the door, you do run the risk of putting off some parties who might have been very interested if they have had more information upfront.
  • A confidential sale therefore runs the risk of getting less interest and taking longer to sell.

You don't want to attract any unsuitable buyers:

  • When advertising confidentially you could run the risk of getting enquiries from people for whom your business just isn’t suitable.
  • Because of the limited amount of information that will be available online, some enquirers will request your details – only to find from your brochure that it’s not quite what they’re looking for.
  • This could mean you’d end up potentially wasting your time with fruitless enquiries.

Really, the only person who can decide on whether a confidential sale is the right approach for your business is you.

There are many pros and cons to this approach – but really it depends on the nature of your business and what will facilitate the easiest sale.

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