Owners fear that they will lose employees, customers and suppliers if they learn that the company is for sale. This places owners in a bind: how do broadcast that the company is for sale, without getting ‘caught’?
Here are some suggestions:
1) Obviously, an anonymous listing with MidMEx is a big help. WE started MidMEx to help owners use the Internet to sell the company.
2) Employees should be used to having a variety of people tour or visit the office or facilities. This way the buyer’s visit will not strike anyone as out of the ordinary. Of course only serious, qualified buyers should be given the opportunity to ‘look around’.
3) The longer the sales process takes, the more likely that someone will discover that the company is for sale. One way to expedite the sale is to gather and organize all relevant documents that the buyer is likely to request. These documents should be placed in a secure place. Consider using electronic versions of these documents.
4) Confidentiality leaks are difficult to prevent. Someone is mistakenly copied on an email or a memo is left in the copy machine – these things happen. Some procedures can decrease the frequency and impact of these mishaps:
- Use a code word or name for the proposed merger or acquisition.
- Conversations concerning the merger or acquisition should be held in private.
- Paperwork should be facedown unless being used.
- All deal-related documents should be kept under lock and key.
- Important electronic documents should be password protected. A common method is to use the code name for the project and a number, i.e. tristate5
- Someone who is highly trusted should fax deal-related documents.
The second biggest fear lies in disclosing confidential information to buyers. This is a particularly sensitive matter when a buyer is, or could be, a competitor. Prospective buyers must sign a confidentiality agreement, sometimes referred to as a non-disclosure agreement. This is always done prior to the seller providing any important or proprietary information to a prospective buyer. The purpose is to protect the seller’s business, trade secrets, and proprietary data, and prevent the buyer from disclosing or using any of the confidential information provided by the seller. Of course, one of the most confidential issues is that the company is for sale.
Today, many of these non-disclosure agreements are mutual: neither party can disclose confidential data. Buyers usually specify that seller information or data is not considered ‘confidential’ if it is already known, available from other sources or is being developed by his or her company. Standard confidentiality agreements can be found on the Internet. For more complex matters, consult your attorney.
None of these precautions are “bullet-proof”. MidMEx is hard at work developing software that will dramatically improve the process of disclosing sensitive information and protecting sellers from untimely disclosure of the sales process.
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