A very common concern of the seller in the sales process of the company is the possibility of misusing the information it provides to a potential buyer. This concern is especially noticeable if the company is interested in buying a company. Although there is no absolute risk of misuse of information, there are procedures that reduce the risk level to an acceptable level. We will talk about them below.
1. Use the intermediary
If your business sales information is not generally known, your consultant - broker can reach potential buyers with your company's anonymous profile (so-called teaser) and monitor buyers' interest. At the same time, an experienced consultant will create a buffer zone between you and potential investors, defending your interests and prudently providing information.
2. Consider the list of investors to address
If you are considering the sale of a company in the form of a tender, it is a standard to prepare a list of potential investors for a long list. In its preparation, it is possible to exclude companies where the risk of data misuse is greatest or companies with bad reputation on the market, incorrect approach and the like.
3. Non-disclosure agreement (NDA)
The Non-disclosure Agreement (NDA) or the Confidentiality Agreement (CA) is a confidentiality agreement that provides potential signers with the signature that they will not abuse the data they will receive during the company's sales process. Although the lawfulness of the law in the event of an NDA violation is questionable, however, it is advisable to keep an eye on the consistent preparation of this treaty.
4. Vendors Due Diligence (VDD)
The standard Due Diligence, ie the company's review is paid by the buyer and is usually executed by the buyer-hired company. Vendors Due Diligence is the form of a business review that is paid by the seller, while the company that implements it, guarantees its correctness and impartiality. From a credibility point of view, it should be known and renowned society. The management resulting from such Due Diligence will be interested in buying a company that has been given a shortcut. This report is also the basis for the valuation of the company, which is being developed by both the seller and the buyer. The advantage of Vendors Due Diligence is several. In the preparation phase of the company, for example, identify weak business locations and take steps to remedy. The advantage is also that it allows you to modify the range of data (not the data itself!) Provided to the buyer interested in the purchase depending on the degree of confidence the seller feels. The VDD report is also a unified base for valuing the business for the seller and the buyer, which can be an advantage in reconciling views on the company's purchase price. The disadvantage of VDD is that it is fully paid by the seller.
5. Standard Due Diligence
If, for any reason, the seller decides for a regular form of Due Diligence and therefore the preparation of the Data Room - a physical or virtual room in which information is stored for bidders and buyer advisors, it is common practice to shuffle data (for example, in contracts) , which are the most sensitive, or their publication would mean, for example, infringement of business secrets.
6. A contract for the sale of a company
Consistent preparation of a detailed deal on a sale of a company (whether called asset deal or share deal) can eliminate the risks of potential future disputes in various interpretations of the oral agreement on details of the purchase of the company. It can reduce the risk of misuse of information after the buyer has withdrawn from the contract itself.
