Once you have decided that would like to sell your business, it is likely that you will have concerns regarding the confidentiality of information relating to the business. Often, a confidentiality agreement (also called a non-disclosure agreement) is entered into to alleviate such concerns and set out how confidential information is handled.

Confidential information: details of the sale

It is likely you will want to make sure that your employees, customers, suppliers and competitors remain unaware of the sale until it is finalised. On the other hand, you will need to give out sufficient information to prospective buyers to let them the know that there is a business for sale and some general information relating to it. Premature knowledge of the sale could, however, cause concern among employees and customers and suppliers, which could have detrimental effect on the value of the business and so a confidentiality agreement is often recommended.

Confidential information: details of the business

The seller will usually need to provide the buyer with a certain amount of information about the business, including financial, legal and other information, to enable the buyer to assess whether the business represents a good investment. This can be particularly sensitive, as is often the case, where the potential buyer is a competitor.

A confidentiality agreement is usually required in order to keep the above information confidential and out of the public domain. Under the confidentiality agreement, the seller will provide the potential buyer access to certain information in return for a contractual undertaking to keep that information, details of the sale and negotiations confidential.