Loose Lips Sink Companies – Confidentiality is Key

As seen in Small Business Monthly

As seen in Small Business Monthly

Confidentiality is an important issue when selling a business

Protecting the identity and confidential information of a seller is very important.

Only non-identifying information should be shared until confidentiality is secured with a prospective buyer through the signing of a Confidentiality/ Non-Disclosure Agreement.

Employees and customers are the two main reasons to conceal the identity of the business being offered for sale.


As business owners can attest, if all employees knew everything that was going on within a business, they would be so distracted that their job performance would be affected.

The knowledge that the owner is considering selling the business would likely cause employees to be distracted, speculate what a sale would mean to them, and be anxious about whether they would continue to have jobs.

All are valid concerns, yet employees can actually be the biggest beneficiaries of a sale.

Consider this:

Potential buyers base their buying decisions upon historical performance and what should be achievable in the future.

Current employees are the business’ biggest asset, and the new owner will value the folks who are responsible for the current successful performance.

In my experience, a sale can provide employees with new opportunities to demonstrate their value, advance with the company and experience enhanced job security. The new ownership’s desire to grow the business is a positive thing for all employees who are willing to work toward that goal.


It’s a well-known fact that people don’t like change. That includes customers. The customer’s first thought is, “How will a change in ownership affect me?”

A business should maintain confidentiality regarding any plans that, in a customer’s mind, would cause concern about his/her future relationship with the company.

Depending on the specialization and level of competition/choices within the industry, customers may begin to explore their options by inviting competitors to bid on their work. In a few cases, informing customers in advance of a sale will work, yet it is generally not advisable, as the business’s future sales could be placed in jeopardy, impacting the viability of the business.

But sometimes…

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Dave Driscoll

Dave Driscoll is president of Metro Business Advisors, a mergers & acquisitions business broker, valuation and exit/succession planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at DDriscoll@MetroBusinessAdvisors.com or (314) 303-5600.

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