Confidential Sale Explained
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 businesses 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?
How does it work?
A confidential sale works differently to a regular sale as follows:
- 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.
- From here, any interested parties will have to sign a legally binding non-disclosure agreement (or NDA) – meaning they aren’t allowed to share details of the sale with anyone else.
- With your approval, any interested parties who have signed an NDA will the receive a copy of your full sales details – providing them with all the information they need to buy your business.
Is it the right approach for you?
If you’re worried that public knowledge of your business sale could have a detrimental effect on your business’s performance, then perhaps a confidential sale is something you should consider. Your staff are bound to become worried about a potential new owner coming in and what this could mean for their future – and in some industries knowledge a transfer of ownership could also lead to the loss of clients or suppliers.
However, you should consider carefully before embarking on a confidential sale as it can have massive effects on the marketing of 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 should they have had more information upfront. Therefore, a confidential sale runs the risk of getting less interest and taking longer to sell.
Also, 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.
To talk your options through with one of our regional business directors click here or call 0800 612 7718 to arrange a free business valuation. At this consultation we will get to know your business in detail and advise you on our recommendations.