What kills a deal? – From John LaMay

What Kills a Deal?

Every year a number of good deals fail, deals that would have otherwise gone through. We are all aware that the passage of time and surprises kill deals. Let’s look at how confidentiality plays a role in some of these failings, including the use of non-disclosure agreements towards maintaining confidentiality. Many deals fall thru due to a failure in correctly utilizing and following confidentiality agreements.

Consider the risk if employees, customers, vendors or competitors discover that your business is for sale or if it is under contract with a serious buyer. Many buyers will walk away from the deal when key employees or accounts leave. Maintaining confidentiality throughout the entire sales process is of paramount importance. There are many benefits to working with an experienced business broker who knows how and when to use confidentiality agreements, including what level of information and detail is shared at each milestone leading up to the successful sale your business. Many sellers do not want to share redacted tax returns, customer account information and trade secrets in the early stages of the business sale.

By using an effective confidentiality agreement, the seller gains protection from a prospective buyer disclosing that the business is for sale sharing confidential information during the sales process. A good confidentiality agreement will also help to ensure that a prospective buyer doesn’t disclose proprietary information, trade secrets or key information learned about the business. You don’t want that buyer to hire your employees away from your business.

When it comes to selling a business, few factors are as critical as establishing and maintaining confidentiality. The last thing any business wants is for its confidential information to land in the hands of a key competitor. Business brokers understand the value of maintaining confidentiality and know what steps to take to ensure that it is maintained throughout the sales process. If you have any related questions, feel free to contact John for more information.

 

John LaMay is an Advisor with Sunbelt Business Brokers. He can be reached at (408) 436-1900, x 105, or at jlamay@sunbeltbayarea.net