"Can you sell my business without telling anyone it's for sale?" a question California business brokers and agents are asked frequently when meeting with potential small business owners thinking of selling their business.
Owners of small - to medium-sized private businesses are justifiably concerned about their ability to maintain a high level of confidentiality when considering selling their businesses. The main reason is the highly competitive nature of business. You could have an exclusive arrangement with a supplier who, if he became aware that you were contemplating selling, might be encouraged to transfer the supplier agreement to a competitor. Customers who are concerned about ongoing source of supply and continuity of both quality and delivery might be inclined to search for another supplier if it became known that your business was for sale.
Key employees often become very concerned about security and opportunities for advancement if the company for which they're working is known to be for sale. Of course, competitors would just love to know that your business is for sale because then they would be able to go after your customers, your exclusive suppliers, and your best employees.
The most common sources of confidentiality breaches are:
• The immediate family of the seller
• Trusted Friends and confidants
• Professional advisers such as law firms, accountants, etc.
Maintaining confidentiality is not a simple task. It is a complex, interlocking process that has to be methodically practiced. The methodology that we believe most successful in maintaining confidentiality is using a business intermediary, an attorney, CPA or some other third party to act as a filter between the owner of the business and the prospective purchasers.
Great care needs to go into marketing materials to ensure they do not provide clues to a purchaser as to which business is for sale. It is also important to de-identify all selling material and documents until the buyer is adequately qualified. Ensuring that all prospective purchasers are qualified to actually receive information about the business is a key part of maintaining confidentiality and should be carried out by your intermediary. A critical first step is to have any prospective buyer sign a confidentiality agreement.
The potential buyer should provide a credible third-party reference (accountant or banker) to attest to his financial capability to purchase the business. Another important aspect of qualifying a prospective purchaser is to establish his or her integrity and reliability. What do the business owner and his or her intermediary know about the prospective buyer? Does the prospective buyer inspire confidence or doubt?
This is an area where a great deal of experience in selling businesses comes in very handy.
If you're contemplating selling your business in the not too distant future, then it's important that you think about what degree of confidentiality will be required. For instance, if you own a gas station or dry cleaner, confidentiality won't be a major concern... Your customers are more interested in your convenient location than in who's running the ship.
That's why you often see businesses such as these advertised openly in the business opportunities section of newspapers. Because selling your business is a complex process, owners of larger companies should plan far in advance for the eventual sale and keep that planning confidential from the earliest stages.
About The Author - Peter Siegel is the founder and President of BizBen.com - Businesses For Sale In California. A nationally recognized author (3 books and a syndicated small business blog) and expert consultant. If you are selling a business and need professional assistance utilizing high performance advertising, marketing, and highly effective strategies, or individual customization with your BizBen Power Search options in buying a California business, you can reach him at 866-270-6278.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers
I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.
|Elizabeth McGovern: Escrow Services - SF Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
|Brad Steinberg, Broker - Laundromat Specialists
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
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