Menu
Keep Your Business Sale Confidential with a Non-Disclosure Agreement (NDA)
Selling your business? Imagine if you decided to skip the business broker and hire your home real estate agent instead. Or to save a few bucks, imagine posting your own free online “business for sale by owner” ad.
Either way, your company would be listed on a public website requiring your address. Now picture your staff members seeing the listing, panicking, and frantically updating their resumes.
With a broker, prospective buyers will be screened for quality before getting any details about your business (including identifying information like your address). Then, the qualified buyers will need to sign a non-disclosure agreement (NDA) that will stop your sensitive information from leaking … and damaging the company you’re trying to sell.
Without an NDA, selling your business is risky business. Let’s discuss the importance of discretion, the role of NDAs, and other measures to protect confidentiality and ensure a smooth sale.
Did You Know...
Information leaks during the sale process can destabilize your business. Competitors can take advantage of you. And nervous employees or customers may run for the hills.
The Importance of Non-Disclosure and Confidentiality
If people hear of your sale prematurely, warned Vincent Côté, Broker and CEO at Transitions Business Brokers, “you can lose staff or customers.”
Employees anticipating a changing of the guard may worry about their employment prospects and start job-hunting. Losing key staff members is never easy—and when you’re selling, it can discourage buyers and jeopardize deals. Fear of instability may drive customers away, not to mention spook your suppliers.
In addition, you want to avoid revealing company specifics (e.g., processes, customers, business plans) to unqualified buyers. If this information falls into competitors’ hands, they may sense an opportunity to steal your customers, poach your employees, or otherwise exploit your business.
The Sensitive Information Shared in Any Business Sale
It’s inevitable: During the sale process, you’ll need to release facts and financial figures so prospective buyers can decide.
There will be showings and information requests. And to attract more offers and secure the best deal, you’ll want to talk with lots of buyers, which means you’ll need to advertise the sale. So, protective measures are vital.
Did You Know...
During the sale process, the best ways to protect your secrets are to meet with qualified buyers only, and to put a strong NDA in place.
What’s an NDA in a Business Sale?
A business non-disclosure agreement (NDA) is a contract for guarding your secrets. When signed, the NDA ensures shared information is used only to evaluate a potential purchase, and not to compete with your company or otherwise take advantage of it.
Your business broker will know how to put a strong NDA in place between you and each prospective buyer you deal with.
A Business Broker Protects Your Sale’s Confidentiality
Another important safeguard is to meet only with qualified buyers. Many people who show interest will be poor prospects. Some will be curious tire kickers, others won’t have the financial means or business acumen, and some may be competitors masquerading as buyers. Don’t share precious information with just anyone who walks through your door.
A business broker will take the right precautions to shield you from confidentiality breaches. “The broker will list your company anonymously, field all inquiries, vet buyers for you, and introduce you only to qualified buyers who sign an NDA,” said Côté.
Your broker can also set you up with a confidential email address and telephone number so buyers can’t see which company you’re from.
Final Thoughts
Whether you’re selling in Toronto, in the GTA, or elsewhere in Ontario, a Certified Exit Planning Advisor (CEPA) and seasoned business broker at Transitions Business Brokers can put a solid non-disclosure agreement (NDA) in place for you so damaging secrets don’t get out. We also vet all buyers. Don’t risk sharing information with those who aren’t qualified.
You only sell your small business ONCE! Let us help you do it right. Engage the Transitions Specialists today.
Transitions Business Brokers
September 15, 2023
