Keeping a business listing confidential is just one of the many services a business broker can provide. Business owners can border on paranoia when it comes to people finding out their business is on the market, listed for sale with a broker. Today I’d like to examine several aspects of this fear.
Is Concern for Confidentiality Legitimate or Unfounded?
First, we would submit that if confidentiality is important to you, the business owner, then it should be important to everyone involved. it is not for the broker to say how important. It is just the broker’s duty to protect it. But from whom do we want to guard the fact that the business is on the market?
Four Distinct Groups to Consider
#1 – Customers
Most business owners absolutely do not want their customers to know their business is for sale. It may cause customers to jump to conclusions about level of service, cause some customers to seek out undeserved warranty claims or returns or even cause customers to look to alternative sources of the service or product being provided. It is not a long leap for a customer to conclude that being for sale means going out of business.
#2 – Competitors
It is a fact that competitors may say bad things about our business for no reason at all. And if they get wind that you are selling your company, they can in effect write a novel describing how you are suffering, in fear of closing – all kinds of negatives that they might gladly share with anyone who will listen.
#3 – Employees
This may be the most sensitive subset of all. no owner wants his good employees to even think about jumping ship if the business is for sale. For some reason, employees conclude that if the business is for sale, the new owner will want to fire everyone and start with a fresh set of employees. While this is almost never the case, it is still a common cause for concern for an owner.
#4 – Vendors
Business owners don’t want their suppliers to know the company is on the market. There are a number of reasons why this might be true, here’s two specific examples. Sometimes a business is slow paying its vendors. If vendors find out the company is for sale, they might tighten credit policies and in effect really hurt the cash flow and vitality of the business. A second reason is that vendors have a tendency to talk. They often view themselves as the kings or queens of gossip and industry knowledge. What they learn at one place of business – they can’t wait to share at the next customer they visit.
Confidentiality is Important
You can see that confidentiality concerns are not irrational Experienced business brokers know how to handle, control and eliminate (to the greatest degree possible) confidentiality breaches.