As a company shareholder or owner, I am sure you have been asked the question about when you plan on selling the company. When I was an owner, I was asked this more often as I rolled into my 50s. After all, when you have owned a company for 20+ years, your employees, customers, and competitors start assuming you are planning (or at least thinking about) an exit.
Of course, my typical canned response was that “I will always entertain any great offer, but, otherwise, I have no plans on selling for at least 5 years or so.” That’s always a safe response, because five years is always far enough out into the future not to evoke fear, but close enough to let a prospective buyer know you might entertain offers.
But when the day finally does come and you are entertaining a serious offer, the last thing you want to happen is for that news to get out into the ether. Even though you may have a signed NDA, that kind of news creates FUD (fear, uncertainty, and doubt) amongst employees. Never good.
So, after selling three of my own personal companies, I want to share with you a few tricks and tips on how to keep this a secret.
But before I do, keep this next statement in mind….
Never underestimate your employees’ ability to pick up on a sale. They are kind of like our children; they pick up more signals than you give them credit for.
We always assume no one is really watching us all the time, and that couldn’t be any further from the truth. Employees (especially long-term ones) can pick up on just the slightest changes in your normal behavior. Changes in work patterns due to COVID, such as working remotely, allows you to be a little more covert, but if you still go into the office on a regular basis, you will want to make sure you review all of these tips:
1. Continue to act normal.
Seems obvious, but here are a list of things not to do because they create suspicion (and I see sellers doing these all the time):
- Do not have buyer conversations in the office behind closed doors, especially if you never typically close your door.
- Do not have conversations with other management with your doors closed, unless that is a common practice of yours.
- Do not sit in your car in the parking lot and take calls, unless you do this all the time.
- Do not ask for accounting information or technical information that you normally do not request without a really good reason.
- Don’t ask for a ton of financial data all at once (salary reports, customer sales by state, vendor margins by year, etc.) This is a big spotlight on something being up!
2. Don’t use your corporate email address.
Even if you feel it is completely secure. There is nothing worse than presenting from a laptop during a meeting and a buyer email shows up in “preview” mode on your screen. Also, once you do enter into a deal, you want to keep all your correspondence with your attorney out of your corporate email as it is very likely your buyer will take over your email address and have full access to past emails. You want to maintain that confidentiality with your attorney, so use a personal, non-corporate email address.
3. Don’t crowd your calendar with “confidential” meetings.
This is especially true when you normally don’t use this feature. Again, this seems pretty obvious, but when multiple due diligence teams start pinging you for dates to have conversations, your calendar can get crowded rather quickly. Of course, you will have to remind yourself to check your personal account, which can become cumbersome, but it’s worth the extra effort.
4. Don’t ask your largest vendor for prospective buyers.
Even if you ask them to keep it “confidential,” they probably won’t. Think about it; if you are looking to sell, and if they are losing one of their largest players (which will likely affect their annual sales quota), they will want to let the person above them know. And, of course, that person will not know that you said to keep it confidential. Before you know it, you will have competitors calling to see if the rumor is true.
5. Don’t start connecting, liking, or commenting on M&A advisors’ or investment bankers’ profiles on LinkedIn.
Your team may wonder why you are so active with these connections all of a sudden.
Finally, one more I cannot help mention…
6. Don’t ask your employees and contractors to sign a new NDA form, unless you have a great reason.
These are the most overlooked areas where I see sellers accidentally letting the cat out of the bag that something is up. But if you are in the midst of preparing for a sale, you WILL want to download my 10 Steps to Prepare for a Company Sale, which gets into much more detail.
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