When selling your business, you may encounter different types of buyers. Each type will have their own set of goals, which can have a separate impact on the process you undertake to sell the business. One such buyer which we will consider in this article is the Strategic Buyer. Strategic Buyers, sometimes referred to as non-financial acquirers, focus on evaluating the synergies and integration capabilities to improve business operations when targeting a business to acquire. Strategic Buyers can include competitors, customers, suppliers, or other parties in the business supply chain.
Keeping confidentiality when selling your business to a Strategic Buyer is highly important. Leaking sensitive business information may lower the value of the business from significant loss of major customers or reduction of competitive advantage within the industry in which the business operates.
There are multiple ways to manage confidentiality during the sale process to ensure a successful transaction:
Accept that nobody buys a secret
For Strategic Buyers to assess potential synergies that could be created by acquiring the business, it is important for them to receive correct business information to make informed and accurate business decisions. The first step of ensuring confidentiality is to accept the inevitability of sharing of sensitive information and coming up with preventative measures to avoid information misuse.
Release information in a controlled and careful manner
Whether it is an email to a potential buyer or an information memorandum to highlight key strategic upsides in purchasing your business, all information should be strictly controlled and carefully included in any document. Before preparation of any document, redaction of sensitive information must occur to maximise the success of the transaction.
Meet early and meet often to assess their genuineness
Frequent meetings with potential buyers to assess the genuineness of their interest in the transaction is crucial. Potential Strategic Buyers must have a clear objective in acquiring the business and this must be assessed before any sensitive information is released.
Non-Disclosure Agreement (NDA)
An NDA is an effective way of managing confidentiality as it constitutes a binding agreement for potential buyers to comply with the terms indicated when information is released to them. By establishing the legal structure around confidentiality when sharing information, the NDA serves to protect the business by outlining clear consequences for buyers if infringement of the terms occurs.
Find Out More
Groves & Partners are experts in undertaking strategic business sales. As advisors on the sale of businesses and companies, we are particularly experienced in developing strategies to help ensure that transactions remain smooth and confidential
To find out more about how we can partner with you to achieve success in the sale of your business, contact us on 1300 892 717 (+61 2 7208 7970) or email info@groves.com.au.