Selling without your staff, customers or competitors finding out

Can you sell a business without anyone knowing?

Yes. Almost everything we do is off market, and it is rare for a client to want a public sale process. The mechanism is a blind profile, a confidentiality agreement and a staged release of information, and it is standard practice for privately held businesses in the $1 million to $15 million range.

The last thing a vendor wants is their staff, their customers and their competition knowing they are for sale. It has to be quiet, and keeping it quiet is a process rather than a promise.

What is a blind profile?

A blind profile is a description of a business that is accurate enough for a buyer to know whether it fits what they are looking for, and anonymous enough that nobody can work out which business it is. It gives the sector, the region, the revenue and earnings bands and the broad shape of the operation. It does not give the name, the address, the customer list, the staff numbers or anything else that would identify it.

Everything a buyer sees before they sign a confidentiality agreement is a blind profile. That is the first gate.

What actually leaks, and how

In our experience information gets out through a small number of predictable routes, and each one has a control:

• A public listing. Removed entirely by not advertising the business.
• A competitor enquiring as a buyer. Controlled by vetting every enquiry face to face before anything identifying is released.
• A buyer talking. Controlled by the confidentiality agreement, by releasing sensitive material late, and by only dealing with buyers who have something to lose.
• Site visits. Controlled by timing them outside operating hours or presenting them as something other than what they are.
• Professional advisers and staff who are told too early. Controlled by keeping the circle small and telling people when there is something definite to tell them.

How are buyers vetted before they see anything?

Anyone we deem a potential buyer is vetted carefully, face to face, to establish that they are the right fit for the business going forward. Two things have to be true: they have the financial means to complete, and they have the skillset to take the business over and grow it.

An owner should only ever meet a handful of qualified buyers. Parading a business in front of twenty tyre-kickers is how information escapes, and it is the fastest way to damage a business that has to keep trading through the process.

What is a staged release of information?

Sensitive information is dangerous in the wrong hands, so it comes out in stages against demonstrated intent.

1. Blind profile. Sector, region, earnings band, broad description. No identification.
2. Confidentiality agreement signed, preliminary information document released. A holistic overview, enough to decide whether it fits the buyer’s acquisition criteria.
3. Buyer qualified on funding and capability. Detailed trading information released so they can establish what the business is worth to them.
4. Offer made and conditional. The commercially sensitive core, including customer detail and unique operating metrics, opens up under due diligence.

We work with the vendor at each stage to establish where the risk sits in handing particular information to a particular party. If the buyer is a potential competitor, the staging is tighter and some material is held until the deal is unconditional.

What do I tell my staff, and when?

Most of the owners we act for are retiring, and they have spent decades building the business alongside people who are a lot more than employees. The conversation about protecting key staff usually happens at the very beginning of the process, not the end.

We have seen owners take a deal that is financially not quite the best offer on the table, because they can see a better future for their staff and their families under that buyer. That is a legitimate way to choose, and it is only possible if the process gave them more than one real buyer to choose from.

What if a competitor approaches us directly?

Treat it as an enquiry, not an offer, and route it through the same gates as everyone else. A direct approach from a competitor is the highest-risk conversation in a sale process, because the information they want is the information that damages you most if the deal does not happen. It can still be the right buyer, and often is. It just needs the tightest staging of all.