In the overwhelming majority of sales, owners of very small businesses do not want the world to know that their business is for sale. So, how do you find the right balance between advertising your sale and making sure that only qualified potential buyers find out about the sale?
Obviously, you’ll want to have a non-disclosure agreement in place before you share any business information. This means that you won’t give out your sales materials until the potential buyer signs the NDA. More important than simply getting a signature, however, is explaining why that NDA matters to potential buyers. Tell them what you’re trying to protect so they understand your position. For example, you can say something like, “My employees have very close relationships with some customers and I don’t want them talking about a potential sale until they feel confident about the new owner.” Most people will sign your NDA but most of them will not read it. If you explain to them what the NDA does and explain to them why it is important to you, they will usually respect the terms, especially if they understand the implications for your very small business. We also believe it is import to remind potential buyers about the NDA at numerous touch points in the sales process.
The other very important thing to remember about keeping your sale confidential is that you control who gets information about your business. If you have requests for sales materials from people that seem dishonest, don’t send them the information. If you are working with a broker, make sure your broker knows who can and cannot receive information about your business. You can tell your broker that you want to review the contact information for potential buyers before sending off the NDA.
Last, if you do list with a broker, make sure you pick a good one who understands that selling a very small business is not the same as selling a big business. Too many brokers will simply send sales materials to any inquiring buyer. We have personal heard of stories of brokers sending sales materials to direct competitors who would NOT be able to purchase their business that was for sale (due to franchise agreements).
As always, management when you’re selling your business comes down to quality not quantity; this begins with the NDA. Get the NDA signed, tell the potential buyer why it is important and then tell them again.
