One concern that many business owners have is sharing information either about the assets that their business owns or about their financial condition with a prospective buyer.  Particularly if the interested purchaser is a competitor, the business owner may have legitimate concerns that if the business owner shares this information with a potential buyer, that the potential buyer may not proceed with the transaction but may use the information learned in these early stages of the process to the disadvantage of the seller.  On the other side of the coin, a potential buyer often will not be in a position to decide whether or not they want to proceed with the purchase of a business until they have had an opportunity to access very basic information about the assets and financial condition of the business.  This problem is easily addressed by having both the seller and the potential buyer sign a confidentiality agreement.

Generally speaking, the confidentiality agreement will provide that the seller will share information about his business with the prospective buyer, but the prospective buyer is prohibited from using this information for any purpose other than negotiating the business transaction at hand.  The agreement can provide for quick court remedies and stiff penalties if the prospective buyer violates the terms of the confidentiality agreement.  The confidentiality agreement can also discuss the return of information shared with the prospective buyer if the deal falls through and can address any other areas of concern that the business owner may have in sharing information with a potential purchaser. If you have questions about selling a business, feel free to contact a Bamberger attorney.

Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com