For many business owners, confidentiality is one of the biggest concerns when considering a sale.
You may not want employees, customers, suppliers or competitors to know you’re thinking about selling until the time is right.
The good news is that you don’t need to disclose everything about your business from the outset. A well-managed sale process releases information gradually, giving serious buyers what they need while protecting sensitive information for as long as possible.
Can you sell a business confidentially?
Yes. Many business sales are conducted confidentially.
The key is controlling what information is shared, who receives it and when they receive it.
At the beginning of a sale process, a business can often be described without revealing its identity.
For example, rather than naming the company, an initial profile might describe it as:
“Established commercial services business based in the North of England, generating £4 million revenue and £750,000 EBITDA.”
That can give a potential buyer enough information to decide whether the opportunity is relevant without immediately identifying the business.
What information should you share initially?
Early information should give buyers enough to understand the opportunity without revealing commercially sensitive details.
This might include:
- sector
- broad location
- approximate revenue and profitability
- business model
- reason for sale
- key characteristics of the opportunity
- high-level growth potential
Customer names, detailed pricing, employee information and commercially sensitive contracts would normally come later.
Use confidentiality agreements
Before revealing the identity of the business or providing more sensitive information, sellers will commonly ask potential buyers to sign a Non-Disclosure Agreement, usually referred to as an NDA.
An NDA sets out how confidential information can be used and restricts the buyer from sharing it with others.
An NDA is an important protection, but it should sit alongside sensible information control rather than replacing it.
Qualify buyers before sharing sensitive information
Not every enquiry needs access to detailed information.
Before sharing more, it is reasonable to understand who the potential buyer is, why they are interested and whether they have the ability to complete an acquisition.
A genuine buyer should expect some level of qualification before receiving confidential information about a privately owned business.
Release information in stages
Confidentiality doesn’t have to be an all-or-nothing decision.
Information can be provided progressively as discussions develop.
An initial anonymous profile might lead to an NDA, followed by more detailed financial and commercial information. Highly sensitive information can then be reserved for serious buyers or the due diligence stage.
The further a buyer progresses, the more information they will reasonably need.
Be particularly careful with competitors
A competitor may be an obvious potential buyer and, in some cases, may be willing to pay a strong price because of the strategic value of the acquisition.
But they may also be the party you are least comfortable giving access to sensitive commercial information.
Customer lists, pricing information, margins and commercially sensitive contracts should therefore be handled carefully.
You don’t necessarily need to exclude competitors from a sale process. You may simply need tighter control over what they see and at what stage.
What about employees?
Most employees do not need to know about a potential sale at the beginning of the process.
However, certain members of the management team may eventually need to become involved, particularly during due diligence.
When employees are told will depend on the circumstances of the transaction, their role in the business and any relevant legal requirements.
It is worth planning this carefully rather than waiting until the issue arises.
Confidentiality on The Brokerage
The Brokerage is designed to allow sellers to control the information they disclose when presenting their business to potential buyers.
You don’t need to publish every detail about your company simply to explore potential interest.
Start with enough information for buyers to understand the opportunity, qualify who you engage with and provide more sensitive information as conversations progress.
Confidentiality cannot mean providing buyers with no information at all. The aim is to give the right information to the right people at the right stage.