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Top 10 ways to protect the confidentiality of your business when marketing it for sale

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1. Use a confidentiality agreement

We always recommend the signing of a confidentiality agreement, often referred to as a non-disclosure agreement (NDA) before a seller releases any sensitive information to a buyer. Indeed, when marketing a business for sale, we will put our name in the NDA rather than our client’s name, and will not reveal the client’s name to the buyer until after the buyer has signed it. In reality, these agreements can be difficult to enforce as you need to prove that there has been a breach, that the other party was responsible for that breach, and then quantify the actual damage caused as a direct result. That’s not easy in a court of law, but certainly not impossible. In our experience, NDAs tend to act more as a deterrent than a guarantee.

2. Beef-up confidentiality in heads of terms

When a deal is agreed in principle, usually the heads of terms are drawn up to set out the main terms and conditions of the deal. They are signed by both the buyer and seller, and although the majority of the document isn’t legally binding, elements of it can be, including confidentiality. This is an opportunity for your corporate lawyer to make sure you’re fully protected for the final stages of the sale process.

3. Don’t disclose the ‘crown jewels’!

If there is some highly sensitive information regarding your business for sale, such as the names of key customers or employees, then you don’t necessarily have to share this with a buyer, particularly in the early stages of the sale process. This can wait until a preferred bidder has been selected and a headline deal agreed. At that point, they may well want to access the sensitive information as part of their due diligence process, but at least at that point you have whittled down the bidders to just one and they should have demonstrated genuine commitment to complete the deal. In some deals, I’ve seen key sensitive information retained until the day of completion.

4. Consider approaching buyers in waves

Don’t feel the need to approach all potential buyers from the start. If there are one or two buyers that you perhaps feel uncomfortable approaching then leave them to one side. You can always revisit those potential buyers at a later stage, if your first wave of approaches proves unsuccessful.

5. Approach your management team first

Last month’s blog explained how your management team might be able to fund the purchase of a business (referred to as a management buyout or MBO). One of the obvious benefits of an MBO is that it doesn’t require you to share information with third party buyers.

6. Draft the wording of your ‘teaser’ document wisely

A ‘teaser’ document is the initial marketing collateral used to approach potential buyers of a business for sale. It doesn’t name your business, but gives enough information for readers to decide whether they wish to explore the opportunity and sign a confidentiality agreement. Clearly, the wording of this document is vital. It needs to give enough detail to generate interest, but not too much that it gives away the identity of the business for sale. We always make sure our clients have reviewed and approved the final version of their teaser document before we go to market.

7. Use Virtual Data Rooms

During the final stages of the sale process, a buyer will want to undertake due diligence on your business, which inevitably means sharing lots of information. In years gone by, this meant teams of accountants turning up on sight and bunkering down in your board room for days on end. With the advancement of technology, this information can, of course, often be emailed, but there are added security benefits of using Virtual Data Rooms. Information is uploaded for buyers and their advisors to review from the comfort of their own offices. The software enables the sellers to monitor when documents have been opened, for how long and by whom. You can also add restrictions, such as preventing downloading and printing, and you can withdraw the buyer’s access altogether if the deal negotiations break down.

8. Keep the sale process as short as possible and avoid holidays

The shorter the sales process, the less time there is for a confidentiality breach, so keep the process moving as quickly as possible. Where possible, try to avoid marketing a business for sale during busy holiday periods, and delay your own holiday until after the deal has completed. You’ll have plenty of time and money for holidays in your retirement!

9. Avoid meetings on site during working hours

One of the drawbacks of a career in corporate finance is that we often have site meetings out of hours. This means there are no suspicious eyebrows being raised by staff when new people are being shown around the business for sale asking lots of questions.

10. Use a project name

If out-of-hours client meetings are a drawback to a corporate finance career, the use of project names is an added perk. We’ve had some creative project names over the years, but they’re not used to make us feel like special agents (honestly!). Project names enable us to refer to the deal with colleagues, clients and other professionals without disclosing its identity to others. It’s surprising how helpful this can be in practice.

If you’d like to explore the potential sale of your business, please get in touch.

Call 0330 024 0888 or email

Next month: Top 10 ways to source buyers for businesses


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Larking Gowen

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