Business Brokers Maintain Confidentiality of Business Sale
According to recent statistics, there are close to 200,000 licensed real estate professionals in the state of Florida. Only a small handful sell businesses full time as professional business brokers. Unlike other realtors, professionally trained business brokers understand the need for confidentiality in their overall communication with the business seller, with respect to their business evaluation, and in their marketing and listing techniques.
Communication with Business Seller Must Be Confidential
- Whenever a professional business broker in Palm Beach County communicates with a seller of any business, their communication must be kept confidential.
- This includes communication before the business seller even agrees to sell their business with the business broker.
- For example, a business broker will never call the business establishment in an attempt to speak with the business seller.
- A business broker would certainly never leave a message with the business seller’s secretary that identifies themselves as a ‘business broker calling to confirm our meeting.’
- Personal cell phones and personal email accounts must always be used.
- This is because of the common desire on the part of business owners to not let any employees or customers know that they are dealing with a business broker who may sell their business.
- Further, a professional business broker would never go into a business establishment unannounced (with or without any potential buyers), for the simple reason that curious employees or customers may easily decipher the purpose of their presence.
- All buyer-seller meetings or on-site visits must be planned in advance with the seller’s consent and approval.
- Unfortunately, realtors (who do not sell businesses full time) frequently break this cardinal rule.
- They do not understand the need for confidentiality and do not have the experience to know how important it is that all conversations pertaining to the sale of the seller’s business be kept private.
- Remember, residential or commercial realtors are used to placing a ‘For Sale’ sign outside their listings!
Business Evaluation by Business Broker Is Confidential
The business evaluation that a business broker gives prior to listing a business is a crucial part of the selling process. It is how the business broker determines the best asking price for the business, and how a professional business broker receives the material necessary to justify the asking price to potential buyers. Everything that the business seller tells and gives a business broker during the business evaluation is kept confidential. Only qualified buyers who complete and sign non-disclosure agreements are ever given the confidential information divulged by the business seller to the business broker during the evaluation. Further, the business evaluation itself must be kept totally private including the business broker’s purpose in the business establishment.
Example of Breaching Confidentiality of Business Evaluation
- Jake is a residential realtor that has been called by Craig to sell his restaurant in Palm Beach County.
- When Jake shows up at the appointed hour for the meeting in the restaurant, he proudly presents his business card to the restaurant’s manager and says, “Hi I’m Jake. I’m a realtor and have an appointment with Craig about selling the restaurant.”
- As a result, soon all the restaurant’s employees know about the possible sale of the restaurant, and several employees quit for fear of losing their jobs.
- Craig wonders why Jake would have revealed his identity and purpose to the restaurant manager.
- But Craig made a fundamental mistake in trusting the sale of his restaurant to someone who was not a professional business broker.
- Jake should have ensured that the meeting with Craig occurred in private and that Jake’s purpose (and identity as a broker) in the restaurant was shielded from any employees or customers.
‘Business for Sale’ Marketing Techniques Must Be Confidential
A business sale advertisement is far different from an advertisement for a residential or commercial property on the Multiple Listing Service (MLS). Business brokers only use ‘blind ads‘ that do not divulge the name or specific location of the business being advertised. This also includes avoiding posting pictures of the business in the business listing if it will allow a viewer to identify the business. Moreover, sending email blasts to potential buyers or other outreach efforts with potential buyers must never divulge the identity of the offered business.
Residential or Commercial Realtors Do Not Market Confidentially
Such ‘confidential’ marketing techniques may seem counter-intuitive, but are essential in order to maintain the seller’s confidentiality during the listing process. Residential or commercial realtors generally do not have the experience or training to confidentially market businesses. After all, their purpose in marketing and promoting their property listings is to reach as many possible buyers as possible without the need for confidentiality.
Business Brokers Qualify Prospects Prior to Divulging Confidential Listing Information
If a business broker has identified an interested buyer for a business listing, the next step is properly qualifying the potential buyer. This will include the prospect completing and signing a non-disclosure agreement. The prospect must attest in this document that the seller’s confidentiality and privacy will not be breached in any respect. Further, the qualifying process includes the prospect disclosing the liquid funds they have available to purchase the business, or their ability to qualify for external lending. A professional business broker will never waste a seller’s valuable time and resources with a potential buyer that has not been properly qualified.
There are many other reasons to hire a ‘confidential’ business broker. They include anticipating problems and issues that can derail a deal, facilitating smooth communication between the buyer and seller (especially during formal due diligence), and pricing the business properly so the business seller can get the best possible purchase price.
Give Martin at Five Star Business Brokers of Palm Beach County a call today for a FREE evaluation of your business.