When I sold my business several years ago, keeping clients and employees in the dark during the sales process was emotionally draining and a challenge from a practical standpoint. I knew keeping a lid on things was crucial and, at the same time, I wanted to tell someone so bad. It was frustrating; however, I managed to keep my mouth shut for as long as I needed.
Based on my experience, here are approaches to keep the sale of your business confidential. I also wanted to suggest some ideas on when to inform two of your key stakeholders – your employees and customers/clients.
Read the first part in this series here: The Importance of Confidentiality When Selling Your Small Business: Part 1 – Risks, Benefits, and Challenges.
Ways to Maintain Confidentiality
#1: Use Non-Disclosure Agreements (NDAs)
Require potential buyers and key advisors to sign NDAs before sharing any sensitive information. This legal protection can deter information leaks.
#2: Limit Internal Information Sharing
Share the news only with essential employees who need to know. Keeping the circle small minimizes the risk of unintentional leaks.
#3: Control Document Access
Use secure virtual data rooms with restricted access for sharing confidential documents with potential buyers. Grant access in stages as buyers progress through the vetting process.
#4: Conduct Off-Site or Virtual Meetings
Meet potential buyers outside the workplace or virtually to prevent employee speculation. Avoid drawing attention by keeping these meetings discreet.
#5: Engage a Business Broker
You know I don’t favor using a business broker when you sell your business, but this is one aspect where a broker is useful. If you’re stymied on the issue of confidentiality, consider using a broker. Utilizing a broker allows for anonymous interactions with potential buyers, keeping your involvement minimal and confidential.
#6: Avoid Premature Employee Discussions
If you must mention the sale, keep it broad. Avoid sharing specifics until the deal is more concrete to minimize anxiety and rumors among employees.
#7: Prepare a Cover Story for Visits
If potential buyers need to visit, have an alternative explanation ready, such as a prospective client meeting, to avoid raising employee curiosity.
#8: Limit Access to Financial Information
If financials are accessible to employees, consider restricting access to sensitive areas. Share only the necessary details when required.
#9: Notify Vendors and Partners Carefully
If disclosure to vendors or suppliers is essential, plan to share this information later in the process and consider using confidentiality agreements.
#10: Have a Public Announcement Strategy Ready
Prepare how and when you will announce the sale to the public once the deal is complete to control the narrative and manage expectations.
Timing the Announcement to Employees
You know you’ll need to tell employees about the sale at some point. The timing of informing employees about the sale is just as important as maintaining confidentiality. Here are tips to help you decide when to share the news:
After Key Terms Are Worked Out
Wait until the sale is close to completed, ideally after both parties have signed a purchase agreement, before informing employees.
Preempting Rumors
If employees might hear about the sale from external sources or notice unusual activities, you may be forced to inform them sooner to prevent misinformation. See item #6 above if this happens.
Aligning with the Buyer’s Plans
If the buyer wants to meet key employees or needs their cooperation, coordinate the timing of your announcement with them to facilitate a smooth transition.
When a Transition Plan is Ready
Provide employees with details about what will change, who will stay, and the overall outlook post-sale. Remember: an employee’s first question will be, “What does this mean to me?” Have answers.
Avoiding Disruptions
Consider informing employees just before the public announcement to give them time to process the news and prepare to respond to inquiries, preventing disruptions in operations.
When to Inform Customers or Clients
Communicating with customers or clients about the sale of your business is equally important. Here are some thoughts for timing that announcement:
Prepare a Clear Transition Plan
Before informing customers/clients, develop a plan that outlines how their experience will change (or not) post-sale. This can help reassure clients about continuity in service or product delivery.
Once the Sale is Concluded
Ideally, inform customers only after the sale has been confirmed. This ensures that you have all the details worked out and can provide clear information on how the change will affect them.
Timing with the Public Announcement
It’s often best to communicate with clients shortly BEFORE the public announcement to keep them informed and prevent rumors. This can also give them time to process the news.
Address Their Concerns Directly
Be prepared to address any questions or concerns clients may have about the transition, such as changes in cost or fees, service, points of contact, or potential impacts on their working arrangements with you.
Communicate Ongoing Support
Reassure clients that support will remain available during and after the transition. If the buyer will be involved, consider introducing them to key clients to foster a sense of trust and continuity.
Conclusion
You may still have sleepless nights when you think about how and when to communicate the sale of your business with employees and customers. However, by implementing strategies to maintain confidentiality and thoughtfully timing your announcements, you can navigate this transition smoothly and maintain trust with your key stakeholders. Keeping everyone informed at the right moment, while protecting sensitive information, will help foster a positive environment during this significant change.
Let’s Have a Conversation:
Have you thought about the issue of confidentiality when it comes to the sale of your business? What issues or concerns do you have? How and when will you tell your customers and employees? Please add a comment below and tell us how you’ll navigate this tricky issue. Thank you.
