Confidentiality is a major concern in virtually every business. Quite often business owners become a little nervous when it comes time to sell their business; after all, business owners usually want to keep the fact that they are selling confidential. Yet, at the same time, business owners want to receive top-dollar for their businesses and sell that business as quickly as possible. In order to sell a business quickly and receive top-dollar, it is usually necessary to present the business to a range of prospects. The simple fact is that you can’t sell a business without letting prospective buyers know that it is for sale.
All of this adds up to one simple conclusion: you will need a confidentiality agreement when selling a business. Let’s look at a few of the key points your confidentiality agreement should cover.
Type of Negotiations
First, your confidentiality agreement should cover whether or not the negotiations are open or secret and exactly what kind of information can be disclosed.
Duration of Agreement
Your confidentiality agreement must specify exactly how long the agreement will be in effect. In most circumstances, it is prudent for the seller to seek a permanently binding confidentiality agreement.
There are other considerations as well, for example, does your business hold any patents? A buyer could learn about your inventions during a buying process so you’ll want to make sure that your confidentiality agreement protects your patent and copyright interests as well.
If you are discussing the sale of your business with a competitor you may want to take extra steps in protecting your confidential information including releasing it in stages of the business sale process.