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How do I deal with competitors who are interested in learning more about my business for sale?

I feel there are a lot of looky-loos trying to find out information about my business. How do you deal with this situation?

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Grover Rutter Mergers, Acquisitions & Va
"We Bring Business Sellers and Buyers Together Confidentially"
Hancock County, OH

Hi Mark. You asked a great question. And you are absolutely right! Your competitors, vendors, customers and employees all pose significant "threats" to the confidentiality and the financial security of your business. And, if you are trying to sell the business by yourself, it is almost impossible to keep the information and transaction confidential. There is real value in engaging an experienced business intermediary (broker). Here is a real life example of how to deal with competitors. Our seller client (a large high-tech prototyping business) received a letter and a phone call from competitors wanting to know if our seller was for sale. The seller's answer every time is: "If and when we decide to sell, we'll have someone contact you." This answer does not offend the inquirer. This way the seller does not let the "cat" out of the bag that the company is for sale. (Competitors can use that information to the seller's disadvantage.). The seller contacted us (we are out of town intermediaries), and we then send blind "tickler" letters to the "potential" buyers who made inquiries. We give just enough information about the business to tickle the inquirer's fancy, but without identifying our client. Then, if the inquirer expresses interest, we require them to sign non-disclosure and non-solicitation agreements. We also require them to provide some confidential financial information. If the the inquirer is truly and seriously a qualified buyer---they will sign the agreements and provide basic financial information to let us know they are financially qualified. However, if the potential "buyers" (inquirers) were just being nosey---then they will generally not complete the paperwork and they will never learn that it is our client who is for sale. There is no good reason to let too many people know that your business is for sale. You only want the ones who are qualified buyers to know. I hope this provides some insight.

Apr 3, 2009
Mike Handelsman
General Manager
San Francisco County, CA

This is one of the key reasons that many business sellers use a business intermediary, like a business broker. A broker can screen potential buyers, qualify them, understand if they are your competition, and meet with them so that you are not required to (unless you want to). In the case of competitors, you could work through your broker to agree on what information you are willing to share with the competitor (perhaps asking for the same information in return), at what stage of the sale process. It is often helpful to require a signed NDA (non-disclosure agreement) of all potential buyers who want confidential information about your business.

Mar 17, 2009

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