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.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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