How To Keep Secrets When Selling A Company

Posted on September 22, 2012 by Spencer Tenney

It sounds like a catch-22: Sharing information about your business is necessary to engage a buyer, yet doing so puts your company at some risk.

During negotiations and due diligence, potential buyers will be privy to sensitive details about your business, from financial documents to business plans. Depending on how this information is shared, you could end up with a smooth sale or damaged goods. Adding a confidentiality clause to your letter of intent can protect your sale — and your company.

What Is a confidentiality clause?
A confidentiality clause gives sellers the power to specify which information will be available, how it will be gathered, and most importantly, how it will be kept private. The letter of intent itself does not represent a formal commitment on behalf of either the buyer or seller. Generally speaking, it’s a formality that serves as proof of good faith. However, clauses within the LOI — such as a statement defining confidentiality — have the ability to be legally binding. This is why it’s essential to involve professionals such as transaction attorneys and transportation business brokers when drafting any sort of agreement for your limousine or charter and tour business.

What can it do?
Most confidentiality breaches are accidental rather than malicious. Sometimes a well-meaning but inexperienced buyer stops by a business to do some undercover investigation, raising employee suspicions. Interested parties with loose lips may unintentionally set rumors flying, jeopardizing relationships with employees and clients. If competitors believe you are planning to sell your limousine or bus business, they may use the information as leverage to lure away customers and suppliers.

Because business value is based on the current state of the company, any changes that occur due to compromised confidentiality can jeopardize buyer interest in the business. Nervous employees may decide to bolt out of fear, leaving a new buyer with limited staff. Customers used to dealing with the current owner may decide to switch companies. Concern over a sale typically produces more panic than the sale itself.

A confidentiality clause allows a buyer to specify that privacy must be maintained not only during negotiations, but also in the event that the deal falls through.

More steps to protect confidentiality
Because every business is different, every letter of intent — and accompanying confidentiality clause — should be different. An attorney familiar with the transportation business can draw up a document that reflects the unique risks of your industry.

More often than not, confidentiality issues arise when buyer and seller work together directly, resulting in misunderstandings and frustrations. By enlisting an experienced business broker to facilitate a sale, a buffer is created between the two parties. An industry professional can create the distance you need to protect your interests — and your sale.

Spencer Tenney, vice president of The Tenney Group (www.thetenneygroup.com), is a member of the International Business Brokers Association and a Certified Business Intermediary (CBI). The Tenney Group is focused on business sales, acquisitions, business valuations and exit planning exclusively in the transportation industry. Spencer can be reached at (817) 274-0054 or [email protected]

View comments or post a comment on this story. (0 Comments)

More News

Metro Cars Builds Strong Affiliate Relationships

The Michigan-based operation believes in the importance of forming bonds with other ground transportation businesses.

Uber Gets Silly, Creepy & Cheap

TNC Travesties Of The Week: Selfie check-ins and ghost drivers. . . and people still debate driver background checks?

Top Luxury Hotels Thrive Despite Global Travel Drop

Affluent consumers are cutting down on stays with a modest decrease in booked nights.

How Tech Platforms Are Changing Business Travel

A dizzying number of mobile icons now let executives manage their flights, hotels, rail tickets, security and expenses.

RedCoach Brings Affordable Luxury Travel To Florida

The company is the first express bus service to offer city center to city center travel, and provides travelers with first-class amenities.

See More News

Facebook Comments ()

Comments (0)

Post a Comment



See More

See More

See More

See More

LCT Store

LCT Magazine - September 2016 $12.95 COVER STORY: * How Do We Max Our Markets? * *


Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment



Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close