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How Can a Business Seller Maintain Confidentiality?

The only way to ensure confidentiality is to not talk to anyone. Not discuss with anyone

what you wish to accomplish. If you want to sell, however, you will need to discuss the

matter with … at the very least … a buyer candidate. Then, if things progress, your

partner, tax and legal advisers. Similarly, the buyer will need to, at some point, talk to

his or her partner(s), banker, attorney, etc. Thereby, the word gets out.

So, the question is actually: How can we delay the spread of the rumor?

A) Don’t tell anyone. I’m not kidding.

If you don’t want the word to get out, don’t tell anyone. Even if you are talking to a buyer about terms, you have nothing tangible to share. That is, if you truly want to maintain confidentiality. Talk is cheap. You have nothing. You probably don’t even know whether the person you are talking to is the real decision maker and has the financial wherewithal and the guts. If, at some point in the future, something binding is agreed to and/or something

concrete happens there may be something to share.

P.S. Most business sellers blow confidentiality all by themselves. It’s a twist on 'The Tell-Tale Heart'. In this version, the business seller’s ego becomes their undoing. They tell their friends, spouse, children, neighbor, and the guy next to them on the airplane WAY before the check has been written and cleared the bank.

B) When you must tell someone (attorney, partner, lawyer), wait as long as possible.

C) Before you disclose, make them promise – verbally and in writing – not to share

the information with anyone except those they must and that are approved by

you in advance.

D) Disclose only to buyer candidates who are qualified and capable. This will

eliminate a majority of the so-called buyer candidates, and require you

implement a method that will allow you to screen the buyers before you disclose

the identity of the seller.

E) Move swiftly. Close the deal in a timely manner. This requires you:

(a) Talk to buyers only when you have all the information you think

they will want to see and review.

(b) Approach buyers in a manner that allows you to screen them fully before

you disclose your own identity, i.e. the identity of the seller. This requires

that you use a representative.

(c) Talk to and work with all buyer candidates simultaneously, with urgency.

Confidentiality is important. Keep in mind, however, it’s a key element of the plan, not the

entire plan. Buyer prospects must be contacted if you are to accomplish our goal of

selling the business for the best terms possible.

Note: The above is possible for businesses that are sold to industry buyers or private

equity groups. The above sale process is not feasible for smaller businesses that sell to

individuals. This is because one cannot identify all the individual buyer candidates in

advance and approach them all simultaneously at the outset of the sale process. With

industry and private equity, doing so is possible.

Contact us for more information.

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