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At What Point Do You Show Key Marketing Info And Materials To Buyers?

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Comments & Replies: 5     Views: 2738     Posted By: Rob Hartman  Rob Hartman, Business Broker, SF Bay Area



Topics: Due Diligence, Selling A Business     Tags: due diligence, for sale by owner, selling a business


Contributor: Business Broker, Inland Empire Area

The answer to this question is going to greatly depend on the type of business. You are correct, success of most small business depend on generic forms of marketing. In a case where the Business’s success depends on proprietary forms of marketing, in my experience – that information is released at a later time once all contingencies have been removed. At that time, the initial deposit becomes non-refundable and proprietary information is released. In some cases, for example: a closed door pharmacy that I currently have for sale – the seller will not provide the names of clients during due diligence, he will provide all information pertaining to the client by naming their clients as Client A, Client B etc. and will release client's names once the deposit becomes non-refundable. In my experience, Rarely will a seller be OK releasing proprietary information without any commitment form the buyer.

Contributor: Broker/Consultant: Elderly Care Services

Great question Craig and a challenge to answer as so many business's are so unique unto themselves. In my opinion, marketing material is proprietary information and should not be shared until all contingencies are removed, the Buyers deposit is non-refundable and the probability of closing is very high.


In many businesses, the proprietary information is one of the most valuable assets; this includes marketing systems, materials, and data. And, once the "barn door" is open, it can be impossible to get all the critters back in their stalls. So, it's a fine line.

The buyer needs to be shown enough during due diligence so they don't cancel and get their deposit returned; but, not so much that they could use the information to the seller's detriment if the sale doesn't go through.

We have used representations about marketing material that, if not realized at closing, will generate concessions to the buyer -- from a sale price reduction all the way to contract cancellation and damages. For example, the seller represents that there is an active database of current or recent unique customer records with 200 having done transactions in the last month, a total of 700 i the last three months, and a total of 2,000 in the last 12 months. At closing, if it is discovered that this numbers are off, the buyer would be entitled to compensation, or, if significantly deficient or non-existent, the buyer could terminate the contract and get liquidated damages to cover attorney and escrow costs, etc.


In regards to restaurants, most of the sellers will provide recipes after the close of escrow, and give instructions on how to cook the dishes during the agreed upon training period after the deal is done.


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