CONFIDENTIALITY AND PLAYING CLOSE TO THE VEST

Most M&A professionals will warn you that you can’t keep your intentions to sell your business close enough to your vest. Confidentiality in M&A transactions is a serious concern in four areas:

• With employees of the selling company
• With customers and suppliers of the selling company
• With competitors of the selling company and the public
• In cases of a public company, as possible insider information

Two approaches exist with employees:

• The Controlled-Disclosure Approach – relevant information is released in a highly-controlled manner.
• The Surreptitious Approach – very few people are aware of the impending sale.

The seller and M&A advisor may minimize the risk of breach by:

• Agreement on strict rules regarding all transaction related communications.
• Nondisclosure/confidentiality agreements with potential buyers
• Control of the Executive Summary
• An agreed-upon target list of buyers

Keeping the sale a secret is nearly impossible; be prepared to announce the transaction, especially in cases where the word leaks out. A planned announcement by the M&A advisor will minimize the damage of a leak, and prevent potential loss of value or sale.