Keeping Your Business Sale Confidential – Success Depends On It!
One of the most essential challenges you will face as you consider the exit from your business is maintaining confidentiality during the process. Simply put, customers, suppliers and most importantly employees tend to get apprehensive as the rumors of a merger become public. How you handle the news of your business sale will depend on a variety of factors; however, most importantly you have to gauge how the eventual release of the information will impact all your key constituencies.
It is fascinating to me as I meet with our clients post-sale that the handling of the confidentiality of their transactions varies from literally involving key employees from the outset to not informing them until the day the buyer walks in the door after the deal closes. What this tells me is this: Each transition scenario is unique; the way you handle yours will be dependent on how comfortable you are with employees, customers, and suppliers finding out.
In some industries, competition is so intense that informing even key employees (or even spouses for that matter) can be problematic. In other situations, business owners are quite comfortable involving the entire staff from the outset, believing that the more informed folks are, the better they will handle the “fear” of the post-transaction operations.
So the decision of who to involve and inform and who not to is something that you need to carefully consider. If you hire an M&A consulting firm, your dealmaker will give you suggestions based on his/her experience about how you should proceed. If you are entering the market on your own, this is something that you need to talk to your trusted advisors about. Under either scenario, here are some basic guidelines to keep in mind:
This is just a short list of some of the issues revolving around confidentiality that you need to consider if you are exiting your business. There are certainly others that come into play, depending on the level of secrecy you need in your business in order to maintain your post-sale operations and the company’s longer-term continuity.
Determine What Works Best for You
Again, we have clients that disclose from the outset to their key employees that they have engaged us to help them find investors. This is usually the case when the owner is determined to stay and operate the company as a partial owner post-sale. In this scenario, it is likely that involving the employees is a great idea, as it enables them to understand that the owner is not departing, but is in fact reinvesting in the business to help it grow.
On the other hand, we also have engagements where the owner does not indicate to any employees what is going to transpire until the day the deal closes. In some cases under this scenario, the transaction is announced to the team the same day that the new owner is introduced. Although this can be quite a shock to the staff, under some scenarios this is the only way to ensure that key employees and customers do not depart during the sale process. Although under this type of process, it is often a good idea to have the buyer create employment contracts with your key folks to ensure that they are committed to staying when the deal is announced.
You can see that the issue of how you handle the confidentiality of your transaction is something that needs to be planned well in advance. Spend some time discussing your situation with your M&A advisor, or if you are looking for buyers without professional help, create a circle of trusted folks that you can have frank discussions with about how you should manage your process as it relates to confidentiality.
The success we have had over the years is driven, in large part, by the ability of our dealmakers to listen to our clients’ needs, determine what is important to them, and craft an M&A process that works for every situation.
If you would like to learn how we can do that for you, call me at 972-232-1125 or email me at email@example.com and I would be glad to discuss your situation and determine how best we could help your exit planning process move forward.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2016 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.