The Importance Of Keeping Your Business’s Sale A Secret - Tips For Business Owner/Sellers
While it is not true in every scenario, the proposed sale of most businesses should be kept confidential, revealed only to business brokers, qualified buyers and others who have a legitimate reason to be informed of the impending sale.
It may be detrimental to the future of the business and the interests of the seller if the business’s employees, customers, or vendors found out about the business’s sale prematurely. It is not uncommon for business owners to inform their management team of their intentions to sell, however, this is a dangerous practice that will ultimately hurt the saleability of a business.
Employees in key management positions should not be informed of a business owner’s intention to sell because they are vital to the value and future success of the business being sold, and informing them may cause them to seek employment elsewhere before the sale is final, ultimately ruining any possible deal before it is complete.
Additionally, hearing about the potential sale would almost certainly cause alarm for all employees, in turn affecting their productivity and their sense of job security. It would be difficult for the business owner to smooth things over with those employees because they can’t guarantee future employment or the direction of the company after assuming new ownership.
If any employees were to leave because they learned of a potential sale, the business owner seller would lose any chance of selling their business and be left without key management and employees.
A business owner can protect the confidentiality of their business’s sale by ensuring that any potential buyers are carefully qualified and have signed a non-disclosure agreement before divulging any information about the business being offered for sale.
A seller can also protect the confidentiality of their business by using various contact methods that are not linked to themselves or their business to communicate with potential buyers.
In order to protect the seller of a business, the impending sale of their business should be kept confidential until the business has officially sold.