Keeping a business sale confidential: how to market a business without telling everyone

When you sell a business, you want buyers to know it is for sale and, for as long as possible, nobody else. This guide covers the listing, confidentiality agreements, releasing information in stages, site visits, privacy, staff and leaks. For the sale process as a whole, see how to sell a business.

Why confidentiality matters

News of a sale can change how people behave before anything is signed.

• Staff. Employees who hear second-hand may worry about their jobs and look elsewhere, and losing key people mid-sale weakens the business.
• Customers and suppliers. Some may wonder whether service, prices or agreements will change, and look at alternatives.
• Competitors. A competitor could use the news to approach your customers or staff, or pose as a buyer to see your figures.

Sales also fall through, and talk can outlast the deal.

What to leave out of the public listing

A listing needs enough detail for a buyer to decide whether to enquire, but not enough for a local to recognise the business.

• The business name and brand. Keep them out of the title, description and photos.
• The exact address. Avoid landmarks such as "opposite the station".
• Identifying photos. Shopfronts, signage, a distinctive fit-out, staff or branded vehicles can all give the business away.
• Unique details. Awards, a signature product or a rare licence can point to one business. So can a combination of ordinary details in a small town.

BizExchange listings show the location at suburb level, not a street address. If the suburb would give you away, you can keep it confidential when you list your business: the listing then shows "Confidential location" with the region only, and on the map the pin sits at the centre of the region. The enquiry form lets buyers ask to sign a confidentiality agreement first, and enquiries go straight to you or your listing agent. The agreement itself comes from you or your solicitor.

Confidentiality agreements (NDAs)

A confidentiality agreement, or non-disclosure agreement (NDA), is a contract in which the buyer agrees to keep what you share private. Terms vary, but one for a business sale usually covers:

• What counts as confidential. Include the fact that the business is for sale, as well as documents, figures and anything learned on a visit.
• Permitted use. Assessing the purchase and nothing else.
• No approaches. A promise not to contact your staff, customers or suppliers without your consent.
• Return or destruction. What happens to documents and copies if the sale does not go ahead.
• Privacy. The OAIC suggests sellers consider privacy clauses.
• How long it lasts. IP Australia's NDA generator offers a set number of years or an indefinite term, noting that an indefinite term may or may not be upheld by a court.

IP Australia says it is important to seek legal advice before you sign an NDA, and that its templates are a starting point to be adapted to the circumstances. Ask a solicitor to prepare or review yours.

An NDA is a deterrent, not a guarantee. It can be hard to prove who passed information on or to enforce the agreement, and nothing undoes a leak. So release information in stages, mark what you share as confidential and keep track of signed NDAs.

Qualify buyers before you release details

Before you send anything beyond the listing, find out who you are dealing with.

• Experience. What do they do now, and have they run a business like yours? Ask directly whether they own or work for a competitor.
• Funds. How do they plan to pay, and where is any loan application up to? See how to finance a business purchase.
• Timing. When do they want to buy?

Keep a simple log of each buyer, when they signed the NDA and what you sent them.

Release information in stages

Each stage gives a buyer what they need for the next decision, and no more.

1. The listing. Industry, region, price, headline figures, lease summary and reason for sale.
2. The information pack, after the NDA. The name and address, history, summary financials, the lease and the staff structure by role, not name.
3. Financials and a site visit. For buyers still serious after the pack.
4. Full due diligence. Records, contracts and staff details, often after a contract is signed subject to due diligence. See our due diligence guide.

The OAIC describes ways to keep control of documents, such as letting a buyer review them at your premises without making copies, or giving limited electronic access through a data room.

Handling site visits

• Out of hours. Show the premises before opening or after closing.
• As a customer. A buyer can see the business trading by coming in as an ordinary customer, with no introductions.
• No staff interviews. Agree beforehand that the buyer will not question staff. Meetings with key staff can come later, with your agreement.
• Paperwork out of sight. Keep sale emails and documents away from shared inboxes, office computers and the counter.

Personal information about staff and customers

business.gov.au says sellers must comply with the Australian Privacy Principles when disclosing personal information to potential buyers, including employee, customer or supplier information.

The OAIC says a seller covered by the Privacy Act must comply with the Australian Privacy Principles during due diligence and should consider whether information can be de-identified. Financial information, contracts and aggregated information about employee entitlements and customers can generally be provided. It says a seller should avoid giving buyers customers' names and other identifiers and, unless employees consent or the information is de-identified, records of employees other than key employees.

The Privacy Act does not cover every small business. The OAIC defines a small business as one with annual turnover of $3 million or less, but says the Act covers some businesses regardless of turnover, including health service providers, businesses that trade in personal information and businesses that have opted in. It adds that a business selling assets that include personal information in its customer database is trading in personal information. Ask your solicitor whether the Act covers you; the OAIC's small business page has a checklist.

Telling your staff

When to tell staff is a judgement call. Some owners tell key people early, others wait until a contract is signed. Either way, aim for staff to hear it from you first, and plan what you will say.

business.gov.au says it is important to talk with employees about the sale, including whether it ends their employment with you and whether the new owner may offer them a job. It also says that under the Fair Work Act 2009 you must give employees written notice, or payment instead of notice, when their employment with you ends, including employees who transfer to the new owner.

The Fair Work Ombudsman says a transfer of business happens when an employee starts with the new employer within 3 months of their previous job ending, their duties are the same or nearly the same, and the employers are connected, such as through a sale of business assets. business.gov.au notes that the new owner must recognise some entitlements but not others. See employees when a business is sold.

If word gets out

• Respond quickly and honestly. Have a short statement ready and say nothing untrue. A denial you later walk back can do more harm than the leak.
• Talk to staff first. Explain what it means for them, without promising things that depend on the buyer.
• Reassure customers and suppliers. Tell key contacts the business is trading as usual.
• Find the source. Check your log. If a buyer may have breached an NDA, talk to your solicitor before you act.

A confidentiality checklist

• Listing and photos free of the business name, signage and unique details
• A decision on keeping the suburb confidential
• An NDA prepared or reviewed by a solicitor, with privacy clauses
• Buyers asked about experience, funds and timing before details go out
• Information released in stages and logged
• Site visits out of hours or as a customer, with no questions for staff
• A plan for telling staff, and a statement ready in case word gets out