5f) The Confidentiality Agreement & Cover Letter
Once you have qualified buyers, it is important that you get them to sign a confidentiality statement to say that they will not distribute any information they receive or learn about your business.
At this point, you should use the assistance of a solicitor to compile such a statement, as it will be a legal offence if the agreement is broken at any time.
The confidentiality agreement will be sent to those that you qualify as serious buyers, commonly by post or fax.
With the agreement, you should send a cover letter giving out your thanks for showing interest in the business along with instructions for completing the statement. Again, the cover letter can be completed with the help of a solicitor or alternatively, your business broker will assist you in this area.
Specify a deadline for returning the confidentiality agreement, say, 2-3 weeks, so that you can further recognise the more serious buyers out of them all and disregard those that do not return the document: those that fail to do so probably slipped through your fingers when qualifying them and had no intention of buying at all.
5g) Issuing the Summarized Selling Memorandum
When a completed (be sure to check with your solicitor) confidentiality agreement has been returned to you, it is now time to send out the summarized selling memorandum that you should have prepared earlier. This way, you can offload any potential buyers that have no further interest after they read the summary. This may result because the business is not exactly what they are looking for and so you should not take immediate offence: they have done you a favour by saving you time to concentrate on the serious potential buyers.
You should also provide them with an option to contact you for the full version of the selling memorandum if they maintain their interest. Some sellers do not issue summarized selling memorandums, instead they just send out the full version. There is no problem in doing it this way: it is simply another step for identifying the more serious buyers out of those you have qualified.
5h) Issuing the Full Selling Memorandum
For those that respond for the full version of the selling memorandum, issue it to them straight away. For those that have not replied, say, two weeks later, follow up with a phone call or letter asking if they are considering following up on their initial interest. If not, ask them why: feed back will always be welcome.
Issue another cover letter with the selling memorandum, again, thanking them for their interest and giving them a deadline for replies to say that they are still serious about buying your business. Add to the letter a request for selling memorandums to be returned if they do not wish to follow up their interest at this point.
Once you have got your replies - these are the people that you will now interact with to hopefully sell the business to one of them. Occasionally at this point, a seller may be left with no potential buyers and so you will have to again find potential buyers and perhaps revise your selling memorandum from any feedback you obtained. However, for the purpose of the article, we will assume you have at least one (qualified) potential buyer.
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