A skilled M&A advisor plays a critical role in safeguarding sensitive details about your business throughout the sale process. From the earliest conversations to the final closing, protecting confidentiality is essential to preserving your company’s value, reputation, and operational stability.
At Roadmap Advisors, we take a proactive approach to minimizing risks by controlling how, when, and with whom information is shared. Below are just a few of the key practices we encourage sellers to adopt to help ensure that their transaction proceeds smoothly and securely.
The NDA
Pre-empt The PE Markup
Private equity firms predictably push back on the same few terms in all NDAs, most of them inconsequential. They typically require the right to retain a single copy of confidential information in backup format for regulatory compliance. They also need the ability to share deal information with lenders, lawyers, QoE firms, LPs, etc. (definition of “Representatives”). The definition of Confidential Information should exclude anything already shared or known to the buyer from other sources. There are about a dozen more of these, reach out to us for the latest list.
Pick a Neutral Venue
Unless your business is based in Delaware or New York, expect buyers to ask for a more neutral venue. Choosing one of these states has the benefit of extensive case law and efficient court systems, which can benefit both sides.
Update Your NDA For This Century
Notices should be accepted in email format. “Return” language should be replaced with deletion requirements, as most information is digital anyway.
Limit Non-Solicitation To When It Matters
Solicitation of employees is more of an issue with strategic competitors than with PE firms who don’t operate in your industry. Solicitation of rank-and-file employees outside of management is less of a risk than solicitation of leadership. Expect pushback on non-solicitation clauses, and have a clear understanding of what you’re willing to accept.
The Information Sharing
Limit Your Information Sharing
It is perfectly acceptable to have separate NDAs for PE and competitors. It is also fine to prepare two different CIMs: one for financial buyers, and one for competitors. You don’t have to share everything with everyone up front. Work with your advisor to create stages of information sharing and gauge who is serious before disclosing sensitive details.
Use Staged Information Releases
Release only the information necessary for each phase of the process. Start with a high-level “teaser,” then provide a more detailed CIM once serious intent and fit are confirmed by your investment banker and the counterparty has signed an NDA. Hold back sensitive customer names, pricing details, or proprietary processes until later in diligence when trust is higher and the deal is more likely to close.
Keep Your Process Tight
Work with your investment banker to prepare all materials in advance and keep your process on a defined, short timeline. A company that is “in market” for 12 months is more likely to suffer from information leaks. An experienced M&A advisor can manage outreach and qualification of counterparties to limit how long your information remains in circulation.
The Deal Team
Leverage Your Advisor
Confidentiality is easier to maintain when you have an experienced advisor controlling the flow of information. Your banker can field early inquiries, manage NDAs, and serve as gatekeeper so you’re not juggling buyer conversations and risking unguarded disclosures.
Choose Who’s In The Loop
Decide in advance which members of your team will know about the sale process and when they will be informed. Start with essential personnel like your CFO and COO. Develop a thoughtful communication plan to explain the need for confidentiality.
Keep Meetings Confidential
Be mindful of what appears on your company calendar and who visits your location. When possible, conduct management meetings off-site. Keep company tours to a minimum, and design them in a way that avoids raising employee suspicion.
The Counterparty
Don’t Engage With The Wrong Buyers
Got a bad feeling about a potential buyer? Does a buyer have a reputation for unethical behavior? Trust your gut. If including a direct competitor that has previously stolen business or employees makes you uncomfortable, you don’t have to involve them.
Ask About Their Process
A serious buyer should have a well-defined process for protecting your information. If it’s a large strategy, who in the organization will see the data? If it’s a financial investor, who will they share the CIM with? Will they need to fundraise externally, which could require sharing your information more broadly? Review the definition of “representatives” in your NDA to ensure you’re comfortable with its scope.
Protect Confidentiality During Your Business Sale
Maintaining confidentiality throughout the sale of your business is key to safeguarding its value and avoiding unnecessary disruption. By taking the right steps, you can better control the flow of information and reduce the risk of damaging leaks. If you are preparing for a sale, speak with the Roadmap Advisors team to develop a strategy that protects your interests from the very beginning.