Client Services
I have someone who is interested in buying my business
They want to see my books and my customer list before they make an offer. Should I let them see this information?
You need to be very careful about giving people access to detailed business information, particularly if they might be a potential competitor. One way to try to protect your information is to have any potential buyer sign a confidentiality agreement in which they agree not to use or disclose your information. However, in reality enforcing confidentiality agreements can be expensive and difficult and a confidentiality agreement alone may not be enough to protect you. We recommend that you think about providing information to potential buyers in stages. For example you can start with a summary of your business, which sets out the general nature of your business, key financial details and an indication of the type of customer base and spread of your business, without actually including specific customer details. If your business is a larger business or a company, this kind of information is usually included in an Information Memorandum which can be given to potential buyers.
If you find a buyer who seems genuine and willing to offer a price within your range, the next step (assuming you do have a confidentiality agreement in place) can be to provide them with some more detailed information, but again you may choose to protect details such as the identities of your customers, key suppliers or other valuable, confidential information.
Once negotiations reach a point where you and the buyer are happy to proceed further, the next step can be to negotiate heads of agreement which set out the basic terms of the sale. This usually allows for the buyer to conduct more detailed due diligence and for the parties to negotiate the terms of the sale contract.
In due diligence, the buyer’s access to confidential and sensitive business information can be controlled, for example by allowing documents to be inspected but not copied.
Following a structured process like this can help you protect your valuable business information.