7 Deadly Sins of Selling a Business: 2. The Second Deadly Sin—Lack of Confidentiality

The key to successfully marketing and selling a business is confidentiality. Business owners do not want customers, suppliers, and the competition to know that their business is available for acquisition. Unlike real estate brokers who hang a “For Sale” sign in front of the property, professional transaction advisors or business brokers maintain a high degree of confidentiality. Whilst the professional business broker may advertise the type of business available on websites or in trade journals, no information regarding the company is distributed until the prospective buyer has executed a confidentiality agreement and passed a pre-screening process which may include financial qualifications. This process is designed to ensure that confidential information regarding the company’s financial performance, operations, and/or proprietary technologies is not distributed promiscuously to prospective buyers who do not have the financial ability to pursue such a transaction, to the general public, or to competitors and their associates. In some cases, business owners will seek the services of a real estate broker to sell their business. This is usually a very unwise approach for the business owner as real estate brokers are typically unskilled at selling a business. Not only do real estate brokers generally lack experience in successfully selling a business, they also do not have knowledge of the unique process and various aspects of selling a business. A real estate “sales” mindset will likely produce suboptimal results for the owners of the business. Placing a “for sale” sign outside a business may have mixed results in attracting a buyer but can greatly damage a business’s relationship with customers, vendors, suppliers, etc.

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