Your business depends on the continuity and trust of your staff, customers and suppliers alike to your business running smoothly. Knowledge of an upcoming sale can undermine this trust and result in unwarranted disruption to your business at a time when it is more important than ever to present a well-functioning business to prospective buyers. When employees, competitors and others find out that you intend to sell your business, the consequences can sometimes be extremely negative. They can go well beyond simply putting the sale of the business at risk. Other problems can occur as well. Here are some of the reasons why a confidential transaction is so important when a business is for sale.
- Employees: Job security can be threatened and employees can quit. Morale and motivation can be negatively affected, which can impact the success of your business.
- Customers: Customers and clients may worry that the company will not be able to maintain service levels after a sale and may take their business elsewhere.
- Suppliers: Suppliers may demand faster payment or may limit credit, which can cause cash flow problems, thereby affecting the profitability and ultimately the value of your business.
- Competitors: Competitors may warn your customers of your intentions to sell, and may actively pursue your customers. Trade secrets can also be revealed.
- Landlords: Landlords may become nervous about a sale and may refuse to cooperate with prospective buyers.
- Creditors: Creditors may withhold new credit, thereby affecting your business’s profitability and cash flow.