When you work with a business broker to sell or buy a business, you’ll notice the broker takes steps to ensure the process stays confidential. Business brokers fulfill several duties and responsibilities to facilitate a successful transaction between business sellers and buyers. An experienced broker will know how maintaining confidentiality, or breaching it, can affect the outcome of the business sale to all parties involved.
To avoid any risks, business brokers will expect their clients to enter into a confidentiality agreement. Certain information and details about a business must not be disclosed to those without permission, and some information that must remain confidential for a period even after the sale has closed. Learn more about what to expect from a confidentiality agreement when working with a business broker to sell or buy a business.
Signing the Confidentiality Agreement
After the broker vets a serious buyer, the buyer will sign a confidentiality agreement before more specific information about a business can be disclosed to them. Business owners won’t want to advertise they are selling their business so publicly (more on this in a moment). The broker is the go-between for the seller’s and buyer’s relationship, so only targeted prospects should receive further communication on an opportunity. It is the broker’s job to connect screened potential buyers with the sellers. This way, no one wastes their time on insincere offers.
The business broker themselves also enter into a confidentiality agreement with sellers. The owner reviews the limited information that is shared to advertise the business sale opportunity for any identifying or sensitive information. Then, brokers can go on to find serious buyers.
Business Owners and Sellers
It’s in the sellers’ best interest to remain discreet about the sale of their business for one crucial reason: preserving relationships. Owners don’t want their employees to get scared off by the change in management or perceived threat of job insecurity. Similarly, telling alerting customers that the business is for sale will damage the business’s reputation even if day-to-day operations won’t change too much. Suppliers for the company might try to take advantage of the change in management or stop doing business with the establishment altogether.
Potential buyers are expected to maintain confidentiality to learn more details of the business sale and its operations because proprietary information will be shared with them. It happens with first-time or veteran buyers: should the buyer not go through with a sale, an owner needs a guarantee that information shared with the buyer will not spread. This critical information can include the business’s financial information, trade secrets, customer lists, employee information, and more.
Work With Atlantic Business Brokerage, Inc.
At Atlantic Business Brokerage, our mission is quite simple; we help sellers sell businesses, and buyers buy businesses! Over the past 30 years, ABBI has facilitated the sale of countless commercial properties, businesses, and franchised locations. With our unparalleled knowledge of the business purchase and sale industry and our network of contacts, we offer services to both buyers and sellers that no other brokerage firm can match.