Confidentiality is at the Core of Business
Insights from Sue Miller, In-House Legal Counsel for The Firm
Buying or selling a business is all about relationships, and at the heart of every good relationship is trust. It starts with establishing trust between the business brokerage and the client. That trust comes through both parties agreeing to protect sensitive information about the business and its inner workings. A legal agreement in the form of a Mutual Confidential Disclosure is necessary to help ensure those expectations are clearly outlined and understood by both parties.
Business owners have often spent years working hard to build their company, so it’s only natural they are hesitant to share information. They don’t want their intellectual property to get in the hands of competitors, other clients, or even friends. It’s no different than not wanting to share personal or financial information with your neighbor down the street. “Once the client understands that we are providing a service to them and trying to learn more information so we understand the business, then they feel more comfortable,” said Susanne Miller, In House Legal Counsel for The Firm Business Brokerage.
"Buying or selling a business is all about relationships, and at the heart of every good relationship is trust."
- Sue Miller, In-House Legal Counsel for The Firm
But that trust and understanding must extend both ways. Not only does the client need to feel comfortable that the brokerage representing them will protect their information, the brokerage company needs to feel comfortable that the client won’t share information about their process as well. “The Mutual Disclosure Agreement puts legal obligations upon both parties when dealing with confidential information,” Miller said. “Just like a client doesn’t want us to share their information, we ask that they do not share our process.”
Just what type of information does the Mutual Disclosure Agreement cover? It applies to all business and technical information including specifications, drawings, software, current and future business plans, product samples, and written, electronic, and verbal descriptions of products. However, it does not apply to information that is generally available to the public. And any information shared is specifically for the purpose of evaluating a possible business relationship.
Having a formal agreement in place gives both parties one less thing to worry about. “Clients feel more secure when there is a contract that obligates us to do what we say we are going to do,” Miller said. “We sign this document with every Seller and with every Buyer to set the relationship expectations right away.” And having that trust from the beginning is what helps set the tone for a successful working relationship for everyone involved.
The Firm Deal Review
Cash Flowing Businesses for Sale: 105
Current Assets Under Management: Over $80MM
Professionals: In-House Consel, Internal Accountant, Paralegal, Research Analyst, along with nine other full-time industry experts
Competitive Advantage: Our peoples - we boast the largest full-time staff of deal specialists - and our proprietary process - confidentially pairing buyers & sellers