Why Confidentiality Matters

“So, I hear you’re selling your business.”  These are words you never want to hear when you are ACTUALLY selling your business.  Why is that?   Because if someone is telling you that, then chances are your employees know, your competitors know, your suppliers know, and your customers know.  This means you have already lost leverage in any negotiation to market your business and may have negatively impacted your current sales and operations.

Confidentiality is the act of keeping information private. This is a difficult task in today’s world, where there are numerous ways of communicating with others, and technology makes sharing information lightning fast. Throughout the process of selling your business, you will share a lot of personal and sensitive information about you, your employees, and your business operations.  This will include tax returns with personally identifiable information, bank account balances, your company’s financial statements, just to name a few.

But how do you know if you have a partner who shares this understanding? How do you know the person you share the most private details of your business with is trustworthy?  You know by their actions. For example, when they call you, do they ask, “Is now a good time to speak privately?”   Do they proactively send you a signed Non-Disclosure Agreement?  Do they talk about the importance of confidentiality in the sales process?  These simple actions are leading indicators of whether someone values the privacy of your information. Choosing a trustworthy partner is essential to your business and any financial transaction to sell.

Here at A Neumann & Associates, we take confidentiality seriously.   It is woven into the very fabric of our corporate culture and emphasized in everything we do.   Here are some of the actions and tools used by A Neumann & Associates during our process to maintain confidentiality:

Company Policy and Guidelines

Our company guidelines and policies are the foundation of our culture. Each employee is trained to adhere to the company policies regarding confidentiality, which include safeguarding our computers and any physical business files.

Non-Disclosure Agreement

We will proactively provide you with a Non-Disclosure Agreement to assure you that we value your privacy and will take all reasonable measures to protect it.

Blind Profile

When marketing your business, we will prepare a blind profile that provides general information about your business. The information presented is enough for them to understand the nature of your business, key financial metrics, competitive advantages, and future growth opportunities. We never divulge the company’s name or specific location.  You, the business owner, should always review and approve this document to ensure no proprietary information is given away.

Buyer’s Non-Disclosure Agreement

Just as you expect your M&A Advisor to operate under a Non-Disclosure Agreement (NDA), you should expect that any buyer interested in learning more about your business has also signed an NDA. 

Confidential Memorandum

Once a buyer has been fully prequalified and has signed an NDA, they will receive a confidential memorandum.  This document, sometimes called a prospectus, describes the business in great detail, including the name and location.   The confidential memorandum should not reveal all the information immediately.  We understand what information needs to be shared at this point of the process and what information should be deferred to the due diligence process.

These are just some of the tools that you should expect your M&A Advisor to use during the business sale process.  Even though maintaining confidentiality can be challenging, you should expect an experienced Merger & Acquisition (M&A) Advisor who will properly and confidentially navigate the sales process.  You have put your life’s work into your business and want to maximize the financial return when you sell, do not leave this up to chance.  Make sure the only words you hear from others is “Congratulations, I heard you sold your business!”