Confidential Business Sales

Keeping a business sale confidential can often be crucial in achieving a successful sale without damaging a business in the process. In this article we examine why it is so important to achieve confidential business sales, and what specific measures can be taken to ensure confidentiality.

The Importance of Confidential Business Sales
Keeping the sale of your business confidential is important for several reasons. Many businesses depend on the continuity and trust of staff, customers and suppliers alike to keep the business running smoothly. Knowledge of an upcoming sale can undermine this trust and result in unwarranted disruption to the business at a time when it is more important than ever to present a well-functioning business to prospective buyers.

Staff may feel that an imminent sale presents a threat to their job and may start looking around for alternative employment. The simple presence of uncertainty within a workforce can affect morale and motivation which can, in turn, negatively affect the business, especially if the sale process takes several months. If a sale is agreed then of course staff do need to be informed. Under TUPE (Transfer of Undertakings Protection of Employment) the staff will remain with the company as the result of a sale, providing them with legal protection of their current pay and privileges. It is generally best to tell staff about a sale a few days prior to completion, and for the new buyer to be present to answer any questions the staff may have.  Being able to present staff with a sure outcome, rather than a period of uncertainty, is usually sufficient to prevent any issues.

Customers may enjoy the personal relationship they have with the business owner, especially in services such as hair and beauty, restaurants and takeaways or where the business involves sensitive personal information such as legal or financial. Even where personal relationships are not at stake, clients who have service contracts with the company may worry about whether service levels will be met following a sale. The prospect of the business owner no longer being there may prompt loyal customers to seek out alternative service providers rather than risk being landed with a new owner who they have not chosen.

Suppliers may worry that a sale indicates some sort of trouble within the business and may begin to demand faster payment or early settlement of bills, or may limit the credit they offer to the business. This can cause cash flow problems to the business, just at the time when the business owner needs to demonstrate the financial health of the business.

Business owners may also not want competitor businesses to know about the sale for a variety of reasons. For instance, competitors may see the sale as sign of weakness and undertake promotional activity designed to drive the company out of business altogether. Alternatively, an owner may wish to prevent the company being taken over by a rival and incorporated into a larger chain.

However, not all vendors require confidential business sales. It will depend greatly on the business owner’s relationship with staff, customers and suppliers, how many of them there are, and the reason for the sale. For instance, a sale due to retirement will be an obvious and acceptable reason to all concerned, and provided the owner keeps people informed is unlikely to trigger problems. However, if in doubt, confidential business sales will generally run more smoothly for business owners than sales which have not been kept confidential.

How Axis Help to Ensure Confidential Business Sales
With so much at stake, and with so many people involved, how can the sale of a business be kept confidential?

Axis Partnership have been conducting confidential business sales throughout the UK for over 14 years. We understand the importance of maintaining confidentiality for buyers and sellers alike from the outset and have developed several strategies to help ensure confidential business sales.

Initial Meetings: We meet with vendors at a location of their choice to avoid others becoming aware of the meeting or of our identity as business transfer agents. Meetings can be held at a vendor’s home or at a neutral location. Alternatively we can attend business premises and arrange for the meeting to appear to be a visit from an insurance company or other professional visitor.

Marketing: We can produce marketing material which limits identifying details. The location can be disguised by referring to the county (e.g. Essex) or wider region (e.g. South East). To prevent staff or other local businesses hearing about the sale, we take care to contact buyers outside a specified geographical area. We never put client names on our website listings.

Buyer Vetting: We check all buyers for funding levels and credit worthiness, and then ask them to sign legally binding non-disclosure agreements before revealing the identity of the business under offer. In addition, the owner is informed of the identity of a prospective buyer before the buyer is told the identity of the selling company. This ensures that only serious and qualified buyers are made aware of the company’s identity. If the owner wants to ensure that specific individuals or companies do not become aware of the sale, we can ensure that those parties are not contacted as part of our marketing, or are excluded during vetting.

In short, maintaining confidentiality on behalf of our clients is as important to us as it is to you, since loss of confidentiality may result in a sale becoming more difficult.

Confidential Business Sales -  to benefit from our broker services and begin the process of selling your business, contact us