Are you feeling a bit nervous about handing over your confidential Business information and trade secrets to potential purchasers? If the answer is yes, you are not alone.
You have worked for many years building your business, developing your systems and intellectual property. If this information or know how fell into the wrong hands, like say a competitor, the impact on your business could be catastrophic.
After eliminating all of the above, what about all the dreamers, the people that want to buy your business, but do not have sufficient equity to raise the funds required to purchase the business. Assessing the financial capacity of a potential buyers is a critical step when deciding who to release information too, after all, if a buyer can’t raise the money, they don’t need to see the information.
As a business owner you need to protect yourself and your business, but on the other hand, when it comes time to sell, it’s difficult to sell a secret, and buyers, accountants, and banks all require information to make decisions.
It’s important to work out what information to share? Who should you share it with? And at what stage of the process should information be provided?
The best thing to do is to appoint a professional business broker, someone that has the experience and systems to protect you and your business throughout the sale process.
Australian best practice is to have every buyer sign a Confidentiality Agreement, ask your business broker to provide you with a copy for review.
In our experience here’s the best way to avoid your confidential business information and trade secrets falling into the wrong hands:
Firstly, understand the screening process that will be used to qualify enquirers or leads, how does your business broker ensure that only serious buyers with financial capacity receive your business information.
We recommend you ask your business broker to talk you through the steps involved. What questions do they ask, what information do they collect? Get comfortable that your confidentiality will be protected.
Secondly, ensure a confidentiality agreement is signed by all enquirers or leads and every potential buyer is spoken to before receiving information. The confidentiality agreement needs to stand up in the Australian legal system if challenged. Remember, potential buyers will share confidential information too, they will be protected by the Australian privacy laws.
Lastly, control the distribution of highly confidential information, send the most sensitive information later, once a buyer has disclosed more about themselves. For example, general information would be disclosed early, financial statements should be provided later in the process, and taxation records after a contract of sale is signed.
A professional business broker manages and protects your confidential information rigorously. Unfortunately, not all do.
So, in summary, you need ensure your business broker follows a rigorous professional vetting process, always has a confidentiality agreement signed, but most importantly, speaks with every lead rather than just send out information randomly. They need to take genuine care to protect your business information and protect your trade secrets.
If you are considering selling your business and want to minimise the risk of your information falling into the wrong hands.
A co-founder of Advantage Business Sales and Valuations, Dione Mauric has a unique ability to create successful outcomes for her clients - ...