The California Association of Business Brokers (CABB – a non-profit trade organization) wants you to know that in order to get the best price when selling your business, mum’s the word. “Keeping the sale of your business confidential is what business brokers do well and that will help you avoid problems and distractions during the sale process,” stated Ron Hottes, president of CABB and of several Business Team Business Brokerages in California.
Hottes says that announcing the sale can cause unwanted problems. “Generally speaking, the sale of a business can take up to seven months to close,” Hottes stated. “You don’t want problems along the way that can delay the process, distract a buyer, or even worse, cause a buyer to walk away.”
According to Hottes there are four main groups that can affect the sale of your business if word gets out:
Employees. Announcing that you are selling your business can cause problems with employees. They can refuse to be cooperative and cause morale problems, ask for wage increases or bonuses to stay on, or start to look for employment elsewhere. This is unfortunate since a hard-working employee can be a valuable asset to your company. Sometimes in stock sales the employees are never notified of the sale. They are told that the owner is going to start slowing down and a partner is being brought in to manage the business.
Suppliers. During the sale process, any number of things could happen that would put a supplier on edge. If a supplier finds out you are selling, they could get nervous and tighten credit limits, put tighter restrictions on your account, start supplying a competitor or cut off supplying materials altogether.
Customers. If a customer is aware of the sale, they may chose to put a hold on further ordering to see how things develop with the sale. This can also give them cause for concern about whether they will get the same quality of product or service and may decide to check out your competition. This could put a dent in your sales – not something a possible buyer wants to see.
Competitors. If a competitor finds out you are selling from an employee, a supplier or customer they can use that knowledge to their advantage. They can steal key employees, get suppliers to switch and steal customers.
“The best way to keep the sale of your business confidential is to work with an experienced Certified Business Broker,” Hottes stated. “A broker knows how to be discrete and understands that confidentiality is key to getting you the best price. In the end, keeping things quite until the deal is closed is the best route for everyone involved.”
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