How should I deal with a potential buyer for my business?
I have had an unsolicited approach from a corporate finance firm saying it has a client interested in buying my business. I was not planning to sell up for at least five years and would be interested to find out more but equally I don't want to waste my time or open my books to someone who may be a close competitor. What should I do?
A. Stephen Goschalk of Insinger de Beaufort writes:
The first thing to recognise is that selling your company or business is a process of steps. It is your business they want and it is you, therefore, that controls the speed of the steps. The first stage is to discover who the other side are. There’s no need to provide information to an intermediary if they won’t disclose who their principal is. Next, get a confidentiality agreement. They are not necessarily a strong bar to the misuse of information but the other side’s willingness to confirm all information given will be kept confidential is a signal they are, at the very least, serious. To protect yourself it is important to segregate the information about your business between the purely financial, which will probably form the basis of any offer they make, and the commercially confidential, where disclosing it to a competitor may prejudice your business. Be prepared to share financial information because this will place you in a better position to obtain a firm offer prior to the release of any commercially sensitive data about your business. If you have an approach from one potential purchaser, there could be more out there. So you should consider, if not a broad marketing campaign, at least sounding out, either directly or through your own financial advisor, other potential purchasers so you know you got the best possible offer before you commit to a sale.