When selling a business, maintaining confidentiality is critical to protecting its value.  If word get out that your company is for sale, it may negatively impact your operations at a time when you need to showcase the company’s strengths.  Examples of issues that may arise include:

• Employees are no longer sure of their future and start to look for work elsewhere.  If they happen to be key employees, then their loss could reduce the value of the company and possibly jeopardize the sale.
• Customers start to consider other options.  They may take the sale of your business as a bad sign that the company isn’t doing well or simply don’t know how the sale will affect them.  If a customer is leary of a sale and uncertain of what changes are coming, they may choose to leave for a competitor.

• Competitors use the information to take advantage and recruit customers away.  Although some competitors may be a good fit to buy your business, others may solely want to access privileged financial and operational information about your company.

Conducting a confidential M&A process will allow you to optimally run your business while maintaining the value of the firm.  The M&A sales process is already arduous and doesn’t need to be made more difficult with issues that can be avoided.

This is a part of our 3-part Confidentiality Series, check out next week’s article on: Key Elements of a Non-Disclosure Agreement (NDA)