Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

February 9, 2016

A Breach Of Confidentiality Could Spell Disaster

By Joseph Eneldas


Undoubtedly, maintaining confidentiality throughout the process of selling a business is one of the most important aspects of a business transaction. Some contend that confidentiality is THE most important aspect, often even exceeding the value determination.  Why so?

“Simply stated,” says Frank Arcoleo, Managing Director, Central Pennsylvania and New York, of A Neumann & Associates, LLC, a leading Mergers & Acquisition and Business Brokerage firm headquartered in New Jersey, “a breach will result in all kinds of negative outcomes, including the loss of customers, the loss of employees, and the loss of access to bank credit.”

The first impact of a breach will be the loss of customers.  This is particularly significant in consumer hospitality businesses with long-term client reservations, such as banquet facilities.  The “news” that a banquet facility is for sale will result in immediate cancellations, essentially destroying future business revenues.  More significantly, it applies to manufacturers that “control” a significant percentage of a customer’s product sourcing.  Any potential risk pertaining to the continued reliability of product deliveries (due to a change in ownership) will most certainly trigger those customers seeking alternate product sources.

Another aspect is the loss of a competitive advantage.  “If a particular manufacturer has a pricing or design advantage, information leaks regarding a pending sale will almost universally lead to the need for the manufacturer to price match competitors to ‘keep’ those customers,” says Achim Neumann, President, “As a result, the breach of confidentiality will immediately deteriorate profit margins.”

Finally, there is the probability that certain key employees will leave – particularly, the ones most important to the business.  Generally, employees do not like uncertainty and are prone to imagine the worst from a transfer of ownership.  And if they just happen to have recently heard from a recruiter or competitor, this could very well be the triggering event for them to “jump ship.”

It is important to note that the “fear of the unknown” PRIOR to a sale is the most negative aspect, not the actual transfer itself.  Businesses for sale hit the market every day, and if done properly, there is no negative impact on clients, pricing, margins, and future business growth.  It is the uncontrolled negative perception PRIOR to a transfer that needs to be avoided at all costs.

Importantly, this applies to both business investors and business sellers.  “Quite often, we are contacted by business investors who actually want to work in the business or who want to contact certain key customers prior to closing,“ says Aaron Soury, Managing Director Southern NY State, “and we need to explain to these folks that doing so would only jeopardize the well-being of the business they are looking to acquire.”

So how can the confidentiality breach be avoided?

First of all, all marketing needs to be undertaken in a non-divulging fashion.  The name of the business or its address should never be stated in advertisements or postings available to the general public.

Secondly, a process needs to be in place to carefully vet potential investors. This needs to include a thorough financial qualification process, not simply the signing of a cursory Non-Disclosure Agreement.

Finally, not all information should be released in the first meeting or even in the first documentation set. “Selling a business is like leading a horse to water” is an often used phrase in the industry, and indeed it’s largely correct.  Only after an offer has been submitted and an escrow account funded (thereby indicative of an investor’s serious interest) should details pertaining to customers, employees, etc., be revealed.

In sum, maintaining confidentiality is crucial in selling a business, and only firms with established processes and a long history of successfully executing such steps should be considered by any business owner contemplating a sale.  The professionals at A Neumann & Associates would be happy to discuss our time-proven process in detail with any interested party


About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional merger & acquisition and business brokerage with more than 30 years of experience in Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland and North Carolina that assists business owners and buyers with the business transfer process in a completely confidential manner. The company is affiliated with national networks of qualified buyers and sellers. For more information, please contact A Neumann & Associates at 732-872-6777.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

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Client Testimonials

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

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“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

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Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs
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Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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