The M&A process can be long and complex. Selling a company requires meticulous planning, experienced professionals, and an appreciation of the deal processes involved in negotiations.
Companies that have not been involved in previous M&A transactions commonly make mistakes that result in under-pricing, unfavourable terms or a failure to complete – which could have otherwise been avoided. Below describes an essential element that private companies must have when trying to sell their business in order to avoid such mistakes.
Have a suitable non-disclosure agreement (NDA).
Businesses must be careful not to disclose sensitive company information without first having a comprehensive M&A-related NDA. The agreement should protect the selling company’s proprietary information and operational secrets.
For example, this can include customer contracts, financial information, intellectual property and others. It is especially essential if the potential acquirer is a strategic competitor.
On top of restricting a potential buyer from disclosing or using confidential company information, the NDA will prohibit the potential buyer from contacting key stakeholders such as employees, suppliers or customers (for a designated period of time). Thus, the NDA ensures that bidders use the information exclusively to evaluate the acquisition – and not for any other purpose.
Management Advisors Pty Ltd is a highly sought after independent financial services firm. Their team has extensive experience in initiating, sourcing and negotiating M&A transactions to completion.
