Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

April 11, 2024

Why Confidentiality is Crucial When Selling Your Business

By Tommy Bennett

signing a business document

We hear the words confidential, secret, private, and non-public all the time in business settings. So much so, that often these important words just sort of blend into the background and their real meaning and intent is lost. Therefore, to appreciate why confidentiality is crucial when selling your business, we first need to start by looking at this magic word – CONFIDENTIAL.

Dictionaries define confidential as “intended for or restricted to the use of a particular person, group, or class”, or as “containing information whose unauthorized disclosure could be prejudicial”.  The concept of confidentiality goes back a very long time in history. Leaked state secrets, or confidential information, could make or break kingdoms and start wars. Leaked trade secrets could derail industrial giants. Leaked private information could be used to undermine rivals. And even ancient physicians who took the Hippocratic Oath promised to respect confidentiality – the long-ago origins of present-day doctor-patient confidentiality. Today, the widespread nature of information sharing, or misinformation sharing as the case may be, weak security practices that allow for leaks, and simple lack of attention to the basic premise of confidentiality have dramatically weakened the basic “promise” of confidentiality.

So today, while the broader business world might be less than diligent in staying true to the word “confidential”, this age-old concept turns out to be especially crucial when selling your business. There are several reasons why.  Let’s look at some of the most important ones.

You need to protect your competitive advantage: Revealing sensitive information about your business could provide competitors with valuable insights into your operations, strategies, and financials. Often, it is a competitor that might be the best suitor for your business. Maintaining confidentiality helps safeguard your competitive advantage and prevents competitors from exploiting weaknesses or copying your business model under the guise of “hey, I might be interested in buying your business”.

Preserving Employee Morale: Employees may feel uncertain or anxious about their future if they learn about a potential sale. Confidentiality provisions with suitors allow you to control the timing and/or manner in which you communicate the news to your employees, minimizing disruptions and maintaining morale during the transition period.

Maintaining Customer and Supplier Relationships: Public knowledge of a potential sale could create uncertainty among customers and suppliers, leading them to seek alternative options. By keeping the sales process confidential, you can continue to nurture these relationships and prevent any negative impact on your business’s revenue and operations.

Maximizing Negotiating Power: Maintaining confidentiality prevents potential buyers from gauging the urgency of your need to sell, which can give you more negotiating power during the sale process. It allows you to control the flow of information and negotiate from a position of strength.

Protecting Reputation: A breach of confidentiality can harm your business’s reputation and credibility in the market. It may create the perception of instability or financial difficulties, which can negatively impact your relationships with stakeholders, including investors, partners, and customers.

Compliance with Legal and Regulatory Requirements: Confidentiality may be legally required in certain situations, especially if the sale involves proprietary information, trade secrets, or confidential agreements with third parties. Failing to maintain confidentiality could result in legal liabilities and disputes.

As you can see, confidentiality is crucial to a successful sales process. The same also applies to fund raising, divesting part of a business, and even major organizational changes. Confidentiality keeps you in control, keeps your valuable information and years of hard work protected, and allows for an orderly process to get you the results that you expect and deserve.

Having worked on transactions that range in value from a few million to a hundred million, we have seen it all and can help you maximize the value of your business. Reach out and let’s have a confidential discussion about evaluating the value of your business.

Our team is standing by to help you on a confidential basis!

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 info@neumannassociates.com

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Client Testimonials

“I'm an attorney. I have represented the buyers and sellers of businesses for 20+ years. Recently I had the pleasure of handling a transaction where Richard Wilder of A. Neumann & Associates was the broker for the seller. Mr. Wilder was of great service to his client. He is very knowledgeable and organized. Thanks to his guidance the transaction proceeded smoothly and closed on time. He is highly recommended.”

Nick Ferrante

“Richard, you came to my office a few years ago and were wonderful in explaining your process and procedures. Our company is probably an anomaly in that we sold the majority to two long time employees and I financed them both. Our company is entering its 45th year and is still thriving. The purpose of the note is to thank you very much for the service that you provide. Thank you again.”

John Foug, Seller

“We had a great experience working with Richard Wilder from Neumann and Associates as the sell-side broker for Blade Runners. He was knowledgeable, professional, and clearly had his client’s best interests at heart. Richard helped keep the process smooth for everyone, and thanks in part to his efforts, we found a fantastic owner to partner with. We'd gladly work with Richard and the Neumann and Associates team again.”

Justin Martin

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Isaac Palmer, Jr.

“If you are looking for a professional and informative company that meets your needs, A Neumann & Associates is the company to go with. Ted Kantor went above and beyond to make our experience as easy as possible. Ted was helpful from the start of our process to the end. He was there every step of the way to guide us and answer all of our questions. He handled all of the in-depth communication and followed up on every detail. We strongly recommend Ted Kantor to help you whether you're buying or selling. It was a great experience. We never imagined it would go as smooth as it did. The Laluna's (Andy, Maria & Tony Jr)”

Maria Laluna

“A Pleasure to work with - I highly recommend them! Working with Richard Wilder was a pleasure, and he found us the perfect match.”

Laura Keith-Macario

“This spring we acquired a business that was represented by Richard Wilder at A Neumann & Associates. Small business acquisitions can be very emotional for the sellers and life-changing for the buyers, and Richard was keenly aware of this throughout the process. Although he was working for the sellers and not for us, he knew that most business owners see their business as their baby so the only way to have a happy outcome for his clients was to also have a happy outcome for the buyers. Knowing how nerve-wracking this process can be (think home buying x 10), he never dropped the ball on keeping everyone updated, anticipating potential snags, and guiding us along in the process. We highly recommend Richard.”

Shannon, Buyer

“My business was my baby for over 40 years. It is a tough and cruel world out there when it comes to selling your business. Neuman and Associates provided the professional guidance/protection to get the job done with care and no pressure. In my view a tremendous value. I would recommend them to anyone seeking to sell their business. Eric Storck, president of Blade Runners Inc.”

Eric Storck, President - Blade Runners Inc.

“I’m really impressed with how your firm operates. The focus on confidentiality, the thorough vetting process, and the use of third-party accredited valuations really stand out. It’s easy to see why you’ve built such a strong reputation over the years.”

Ann M., Investor

“Thanks for sending over such a detailed CIM.  While I have only reviewed a have dozen CIMs at this point, your company has put together the most comprehensive data and detailed presentation I have seen so far.”

Ben N., Investor
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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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