Business Broker for Manufacturers San Diego – Why is Confidentiality Necessary?

Confidentiality is one of the first words you will discuss with a business broker for manufacturers San Diego trusts. But what is it about? Are you wrong to demand it? In this post, we will be taking a look at why confidentiality is necessary when selling a manufacturing company.

Confidentiality is the cornerstone of the sale or purchase of a company. As a result, a confidentiality agreement starts from the first moment you meet up with a potential buyer. It is important to provide potential buyers with the necessary information that shows your company is for sale but also stress on them keeping everything a secret through a confidentiality agreement. With this level of transparency, you will avoid suspicion arising thus reducing the likelihood of them leaking information about the sale to their colleagues or to the public.

While confidentiality allows the parties to share information without leaking the information to external parties, you cannot rely on verbal promises. To guarantee confidentiality is maintained, you need to draft a non-disclosure agreement. This is a legally binding agreement that keeps potential buyers from sharing the information you disclose to them with anyone else. An experienced business broker for manufacturers San Diego will be able to draft an NDA that covers every aspect. Moreover, a business broker will take time to pre-qualify buyers before sharing any information with them.

Maintaining confidentiality throughout the sale is very important. This is more so when you consider the role played by new technologies which make information more accessible and easier to share. Signing a non-disclosure agreement obliges all the parties involved to monitor compliance with several obligations that relate to the transmitted information. The NDA burrs parties from sharing information not just in the present but also in the future. Non-compliance by any of the parties can affect the operation’s development and closure negatively.

What happens if information is leaked?

When information is leaked, there are many issues that can follow.

Variation of transaction price

A rumor can cause the market to change the price of a share. The case is the same in the sale of a business. If information is leaked, employees can exit, shareholders may withdraw and so many issues can follow that cause the value of a business to decline.

Exit of key professionals

In fear of the unknown future, if rumor spreads about the sale of your company, you may lose key professionals. This may distract operations and even cause buyers to back out.

Confusion in the workforce

Rumors of a sale can generate nervousness among the employees. This will impact work performance.

Concerns of customers and suppliers

News of transfer of ownership can cause customers and suppliers to grow cold feet. This is because they don’t know if they will approve the new owner.

A lot can happen if confidentiality is broken. That is why you need the help of an experienced business broker for manufacturers in San Diego to help with confidentiality management. The fewer the number of people know about the sale the better.

Business Manufacturers for Manufacturers San Diego

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

What happens if information is leaked?

The Sales Process