How do you maintain maximum confidentiality when selling your business?
What if you posted a sign in the window of your business saying “Business for Sale”?
- Would you be able to keep your employees?
- Would customers still buy from you and would they sign long term contracts?
- Would suppliers continue to give you payment terms?
The answers are probably “No”, “No”, and “No”. Employees would start looking for a new job due to uncertainty. Uncertain if they will like the new owner and uncertain if the new owner will like them or even see a need for their position. Customers buy from those that they establish a relationship. How do they know they will get the same quality or level of service from a new owner? This may give a long time customer an excuse to start shopping the services or products they purchased from you for years. Suppliers may not know why you are selling and will want paid on delivery versus offering terms. This may create short term cash flow issues if you were previously given terms. They don’t want to have to try to collect their money from a new owner that they do not know.
Some key steps in maintaining confidentiality:
These are several reasons a business sale must be completed confidentially. Selling a business means no signs advertising the business for sale and a game plan of informing employees, customers and suppliers of the sale at the right time. A properly planned, marketed, and transitioned business to a new owner will ease all of these concerns and maximize the amount that you will receive from the business sale. Loss of employees, customers, and supply terms could result in a decrease in revenue and cash flow causing a loss in business value and possibly make the business more difficult to sell.
Blind Marketing and Confidentiality Agreements are the Answers
Still wondering how to sell a business without telling the world that it is for sale? Blind marketing is a term that describes the vague marketing of a business for sale. We are able to “sell secrets” without employees, customers, suppliers, and competitors knowing that your business is for sale. Once a prospect expresses interest in a business that we are marketing for you through our methods, we have them complete and sign a confidentiality agreement (non-disclosure agreement). This document forces the issue to weed our tyre kickers to show that the party has real interest in purchasing the business. This agreement legally prevents the prospective business buyer from disclosing any and all proprietary information on your business.
We will handle the confidentiality process for you, saving you time to only meet with the really keen buyers. At this stage, you get to meet with every single keen buyer, you get to show them around your business at a time that suits you and you get to explan why your business is so great all with our guidance to answer any difficult questions and to turn an interested prospect into a keen buyer!
Think Like the Buyer
One more tip on how to sell a business effectively – think like the buyer.
When preparing to sell a business, you need to think what would be a buyer’s first impression of your business when they arrive. Is it clean, well maintained, and up-to-date? Are the financial records in good order? Have you prepared answers and supporting data for those critical questions that you know a buyer will ask? Preparation is the key to a successful sale. You may only get one chance to sell a business to a buyer. The wrong answer to a question may send them on their way.
Many business buyers are first time buyers so they may be both excited and scared. They will perform extensive due diligence on the business to make sure that everything that you have told them is accurate. They will want their accountant and attorney to review the information. EurekaMax has the experience to help you prepare for this due diligence period when selling your business. An important point to remember is that buyers cool off while waiting for information to be gathered. Preparing for due diligence prior to a buyer prospect giving you their detailed list is critical if you want to sell your business to maximize your price and terms. Slowing down the momentum of a deal is not wise. We will provide you with full guidance on this.
Do I need a professional to handle the process?
YES – You will only sell your business once…why risk not doing it right?
Whatever your reason may be, selling your business is best handled by you when you have the advice and assistance you need, when you need it. You know your business better than anyone else and we are business sales specialists (all our sales are conducted through a licensed real estate business broker), so we use this combination of skills and experience to deliver a business sale at the maximum price for you. What you could save on commissions by not using an experienced broker can be easily lost by less effective negotiations, poor due diligence management etc.
Contact Martin Dabb on 0458 290 100 or email me whenever you’re thinking of selling your business in Rockingham, Kwinana, Cockburn or Kwinana.