When it comes to mergers and acquisitions, the importance of confidentiality cannot be overstated. Not only do you need to keep certain specifics to yourself – things like customers lists, vendor contracts, etc. – but you need to keep the actual fact of selling your business as secret as possible as well. Read on for our guide to keeping things quiet…
Ultimately, your customers are going to find out about the sale of your business. However, it is incredibly important to keep this confidential until the process has been completed – if your customer base starts to look elsewhere for a place to conduct business, then the value of your company can plummet, possibly leading to the collapse of the sale altogether.
Once your competition finds out about the transaction, they will inevitably look to leverage the opportunity provided by any disruption to your operations, and attempt to poach your customers – through increased marketing, temporarily lowering prices, or other activities. This will have an effect on the value of your business, as any buyer is depending on continuing on with (and expanding on) the existing customer base.
Of course, your buyer will be conducting extensive due diligence and analysis of your business, and it is important that you are as open and honest as you can be. However, consider this situation: you have an interested buyer, and you share all the details of the business – customer lists, supplier contracts, employee remuneration, other specifics – but then the buyer drops out. They still have all that confidential information, and they can use it to compete with you and devalue your business. You can use non-disclosure agreements (NDAs) to combat this, as well as confidentiality agreements, but the only real way of stopping such important data from leaving the company is by blanking out or redacting any names of customers and suppliers, and using rounded figures for financials where possible.
Part of the confidentiality process can actually take place before you are even talking to potential buyers. Instead of opening up your business to scrutiny from anyone that shows an interest, you should be screening your buyers. This process ensures that the person/company that progresses to the due diligence/financial reporting stage is the right buyer based on your requirements – so you can exclude competitors, for example.
Using an established mergers and acquisitions firm will help you to navigate the confidentiality minefield. They will pre-screen your buyers for you, set up legal systems for ensuring secrecy (NDAs, confidentiality agreements, etc.) and make sure that the process of selling your business proceeds as smoothly as possible. Pinnacle Pharmacy Group is dedicated to all elements of mergers and acquisitions activity in the pharmacy and digital health sectors, and will do everything they can to make sure that your transaction is hassle-free for you.