Becoming a Better Business Broker Day 21: How to Protect Confidentiality
Welcome back to Becoming a Better Business Broker in 30 Days!
This concise series title describes exactly what we hope you get out it - becoming a broker that can close more deals with less work.
Before diving into today make sure to check out our last article, Unorthodox Deal-Making Strategies.
You're actually lucky to even read this article today because we're discussing How to Protect Confidentiality today (that's how seriously we take the topic).
While not the most exciting topic, preserving your client's confidentiality during a sale is one of (if not the most) important aspects of our job as business brokers. So without further adieu - let's break it down ??
The Ironclad NDA
The Non-Disclosure Agreement (NDA) is your first line of defence. We also don't mean just any template pulled off LawDepot, but a robust, tailored agreement for your brokerage. Ensure it's specific about what constitutes confidential information, who it can be shared with, and the consequences of breaches.
Remember, an NDA is only as strong as its enforcement, so don't shy away from reminding parties of their obligations. Especially as many Buyers sign NDAs without actually reading the terms of the agreement. As a result, we've had Buyers walk into a Seller's business and start asking the employees weird questions - not cool.
How do you prevent bad (or lazy) actors? Create pop-up messages + alerts in DealBuilder that make a Buyer acknowledge they are to use their absolute discretion in reviewing the business, clarify the staff are unaware of the sale, and they can't freely share information to business partners without an NDA being signed.
Know Who You're Dealing With
Building off the last paragraph before you even release the CIM/CBR to a Buyer, do your best to vet them in advance. There is a tricky balance between asking enough questions and creating friction that will prevent Buyers from submitting an NDA.
Here are a few ways to 'vet buyers' by ranking them from low friction (#1) to high friction (#6).
As you move down the list, the less likely a Buyer will agree to provide this information. That being said, DealBuilder makes it easy to integrate document uploads, buyer questionnaires (built like Google Forms), and other vetting tools right into the NDA submission - to make this as painless as possible.
Regardless if you're using DealBuilder or not - you need to do your homework on potential buyers or investors to ensure they're legitimate, have a genuine interest, and aren't just on a fishing expedition. This vetting process should be thorough and documented, creating a trail that justifies your decision to share confidential information.
The Art of Discretion
Throwing NDAs and Buyer Qualifications out the window for a minute. The best way to preserve the confidentiality of a deal is to have fewer eyeballs on it.
While unintuitive, it makes sense. For example, if only 1 person has access to a deal (and it leaks), it's pretty easy to find the source of the leak.
Unfortunately in our profession, we can't always present to 1 buyer and have the deal close (wouldn't that be nice?). Instead, we rely on getting multiple buyers interested. At our brokerage, we increase confidentiality by breaking down our marketing approach into 3 waves:
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1st Wave - Buyer Short-List Email Blast
2nd Wave - General Buyer Email Blast
Wave 3 - Marketplace Listing
Cut-off Buyer Access
Got a mystery Buyer who has submitted an NDA, received the CIM, and then stopped responding to your emails or calls? It's probably best to cut them off.
You can do this easily in DealBuilder. Using our Buyer Analytics tool you can see if a Buyer has accessed a CIM, how long they spent in the CIM, getting as granular as how much time they spent on each page:
Using these insights (and our automated follow-up emails) you can prompt Buyers to update their status on a deal and if they are no longer interested:
Resulting in a quick visual update on where each Buyer sits in your pipeline:
If they hit any of the above options - their access to the online CIM is automatically cut off. Helping you keep sensitive CIM information more secure.
If you want to learn more about maintaining confidentiality with DealBuilder , please visit our site or book a demo here .
Conclusion: The Silent Guardian
In the world of business brokerage, confidentiality is not just a best practice; it's core to what we do. By implementing these strategies, you're not just protecting your client's information; you're safeguarding your reputation as a trusted advisor. So, take it seriously, because in the end, how you handle confidentiality can be just as important as the deal itself.
You know what's coming tomorrow? You guessed it - another article! This time we're doing our best impression of a mind-reader and diving into The Psychology of Selling.
If you've ever left a conversation with a Seller scratching your head and feeling absolutely bamboozled - this one is for you ??
If you want to learn more about automating your business brokerage with DealBuilder , please visit our site or book a demo here .