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  • The Confidential Sale of a Business

    Mar 9, 2016

    The successful sale of any product or service requires the ability to present the benefits & attributes to a customer. The products sold in business brokerage are privately held companies & family owned businesses. IBA has a reputation in the Pacific Northwest business community for facilitating transactions involving established, profitable companies in an environment of full disclosure employing “best practices” in terms of deal facilitation.

    The successful sale of a business is complicated by the issue of confidentiality. Confidentiality requires a mergers & acquisitions professional to balance two conflicting objectives in the best interest of the client when marketing a business and facilitating a sale. The first objective in the sale is to market the business to the maximum number of parties to achieve the market conditions necessary to facilitate a sale at the best possible market terms. This objective is best achieved through the use of a comprehensive marketing effort. The second objective is to prevent the knowledge that the company is for sale from reaching customers, employees, vendors, & competitors. This objective is best achieved by setting up systems & procedures that incrementally distribute information to potential buyers.

    It is commonly known in the entrepreneurial community that it is prudent for any party looking to purchase a business in the Pacific Northwest to participate in IBA’s buyer database to receive the first opportunity to evaluate for acquisition the companies represented by IBA for sale. This database also benefits IBA clients on multiple levels. The first benefit is that the database provides business owners who list their company for sale with IBA with a prequalified set of buyers that will review the opportunity as a potential acquisition immediately after it enters the market. A sale to a party in this database is not guaranteed for IBA clients, but commonly occurs. The second benefit of the database for IBA clients is that all parties in the database have executed confidentiality agreements with IBA and have committed to hold information provided in strict confidence. It is very rare that information shared with participants in our database will enter the public domain because business buyers know that if their actions lead to improper distribution of information about a business being for sale into the public domain they will no longer be allowed to participate in IBA’s buyer database.

    If a buyer is not identified in IBA’s buyer database, our marketing efforts will be enhanced to include a spectrum of venues in the public domain. The marketing of a business in these venues will be performed with experience & business acumen to insure that appropriate information is distributed to generate buyer interest while not providing enough information to allow individuals & companies that review the information to identify the specific company for sale. IBA has a long track record of successfully navigating this path. It is a path that takes skill & patience to navigate successfully. Once a potential buyer is identified through the use of this comprehensive marketing effort the party will be asked to complete a confidentiality agreement and demonstrate the financial ability to negotiate in “good faith” the purchase of the business. Financial qualification of a party is an import component in maintaining confidentiality. The process reduces the amount of information distributed to parties that cannot complete a transaction. Another component of maintaining a confidential environment is personal engagement with potential buyers. In today’s business environment there is an inclination to respond quickly to buyer inquiries by email. This is not the best way to sell a sophisticated product like a business. Serious buyer inquiries to IBA are traditionally responded to with a phone call. The conversation that results will allow the IBA professional representing a specific company to further assess whether the buyer is a candidate to buy the business based on their experience, motivation for the acquisition, and geographical preference for the location of the business.

    The successful sale of a privately held company or family owned business is an achievable goal for an entrepreneur. It is a goal that is best achieved employing practices & procedures that will allow the business to continue to operate during the sale process without customers, employees, vendors, and competitors knowing the business is for sale.

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media and the mergers & acquisitions community on confidentiality and any other subjects relevant to the purchase & sale of a business.

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