Is Confidentiality Crucial?

The adage “loose lips sink ships” doesn’t have ancient origins.  While it sounds like one of those sayings that’s been around forever, it was created during World War II, and was taken quite literally.  The truth behind the phrase was that a lack of secrecy or confidentiality could lead to the losses of war ships or other wartime deaths.  So, the saying was serious. Today, the “loose lips” adage is used often in the business world.

Safeguarding Businesses
Few things are more important than safeguarding your business from information leaks.  Leaks can lead to business disasters and can be particularly damaging if you are in the process of selling your business or hoping to do so.  A leak that you are planning to sell your business can have a range of consequences.  Everyone from employees to customers, suppliers, prospective buyers, and competitors could all take notice, and this could have ramifications.

The Confidentiality Conundrum
Even though confidentiality is important, ensuring it presents a bit of a “Catch-22” situation.  Sellers want to get to the best price possible for their business and that means letting prospective buyers know that the business is for sale.  The greater the number of potential buyers contacted, the greater the chances of receiving top dollar.  However, the more potential buyers who know a business owner is interested in selling, the greater the risk of a leak.  Clearly, this situation represents a considerable dilemma.

If you are a buyer, you may discover that owners can be overly, perhaps even irrationally, concerned about confidentiality and leaks.  It is important to remember that for most owners, the business represents their largest asset and often their greatest professional accomplishment in life.  In other words, they have a lot riding on their business.  It is important to remind sellers that the less time a business is on the market, the lower the risk of a leak.  Also, the longer the negotiations go on, the greater the risk of a leak.

How to Ensure Confidentiality
Sellers should always remember to keep all important documents related to the sale or potential sale literally under lock and key.  Everything should be considered confidential and only transferred to buyers in a highly secure fashion.  Confidential information shouldn’t be emailed or faxed, as this makes a leak much easier.  Sellers and buyers alike should remember that they shouldn’t discuss the sale or potential sale with anyone.  Confidentiality should be stressed always.

Working with a merger and acquisition advisor, like those at EastWind Business Solutions, is one way to dramatically reduce the risk of a leak occurring.  For these advisors, confidentiality is a cornerstone of their operations.  Business intermediaries require buyers to sign very strict non-disclosure agreements.  While loose lips may sink “ships,” there is no reason your business, or the one you are interested in buying, must be one of those ships.

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Copyright: Business Brokerage Press, Inc.
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