The Exit Factor – Confidentiality
October 16, 2014
If I get an urgent call at five thirty on a Friday night from a client trying to sell their business, I know there’s a good chance that confidentiality has been breached. Issues of confidentiality are part of every deal and, if you want to exit, then you need to think about how you’ll deal with this in advance.
Plan for leaks
You’ve decided to try and sell your business. Think about who you need to tell in the management team and staff, and when. Think about the story that underpins your news. It’s a good idea to scenario plan and ‘think through’ how the news is going to affect your customers, staff and public interest bodies. There can be many unexpected and potentially unhelpful effects. You also need a contingency plan for how to deal with the story if it reaches these groups ahead of schedule, through a leak.
In this sense, getting to know a firm of advisers you can trust and having them ready beats engaging multiple advisers in a beauty parade. The problem with the latter approach is that, the more advisers you consider, the more likely news of your plans will get out, and the harder it will be for you identify the source or stem the flow.
Once your news is out there, journalists may get interested. And if they contact you, they’ll inevitably have a stab at your asking price. They may be way off, but this is something you and your advisers will have to manage now. A price that’s reported too high alienates prospective buyers; too low and it strips your plans of credibility. Not good. You want to be treated seriously at this point.
Fighting media wildfires
News tumbling out in an unmanaged, messy fashion may also upset sensitive customers or contract negotiations. Twitter and other social media channels only make this a bigger risk. You don’t want to spend your time and energy on fighting media wildfires when your attention should be directed at negotiating the best exit possible, so plan for this.
Have a PR strategy for your planned communications, but also a holding statement and an ‘emergency PR plan’ for a leak. You may want to engage a professional public relations consultant or formally instruct your advisers to manage this.
Anonymised teaser
Ensure advisers and potential purchasers have signed a confidentiality letter and/or non-disclosure agreements. Think carefully about what you say in the teaser document, and whether you should produce one at all. The teaser document is the anonymised summary (usually of 1-5 pages) of the company and circulated by advisers to drum up interest. But beware. If you’re the only aquarium manufacturer in the north of England and are described as such, it won’t take a genius to work out who you are.
Has a deal you’ve been involved in had a PR leak? What effect did it have on the outcome? What would you do differently next time? Share your thoughts below or schedule a meeting if you’d like to discuss your situation more confidentially.
