This is a page from my book, “How I Sold My Business: A Personal Diary”
We have the information on the other company that seems interested in buying our company, and they are a local competitor, though they tend to work in a different area of the city than we do, so we don't run into them much. I've heard their name, but to my knowledge we've never competed directly against each other. I also know their lawyer, a person I talked to when I was first looking for a business attorney. He's worked up a questionnaire for us to respond to, and it's pretty detailed.
The document they sent us was pretty large, about twenty pages long, and including the following sections, with questions in each section they wanted us to respond to:
- Corporate records
- Employee matters
- Government regulations and filings
- Intellectual properties
- Liens and security interests
- Litigation, disputes, and claims
- Loan agreement and other financial arrangements
- Material agreements
- Real estate
- Research and development
- Security measures
In many ways our business is very simple, and because (a) this company is a local competitor and (b) the paperwork seemed like a boilerplate document that was more appropriate for a huge corporation than a small LLC, we often answered Yes, No, or N/A to many of the questions. We also decided to skip many other questions, writing "Available after a signed Letter of Intent."
Although we now know the name of this company, we haven't met with them yet, so again many of these questions seemed premature. If it seems that I'm overly cautious about sharing information about our company or clients in preparing these documents, let me share a short story.
A little while ago I got a business deal because one of my competitors had a big mouth, and they were talking publicly about a prospect. They either didn't know I was a competitor, or didn't care, but either way, they babbled on about their customer, including contact names, at a social engagement. I remembered the names, made a call on this customer, and took their business away. So I hope you can understand that when it comes to strangers asking anything about my business, I don't want to give anything away until we are extremely close to a deal.
To me, this is also where your broker can act as a sounding board, saying something like, "Think about it. Imagine you're the buyer at this stage. Wouldn't you like to know this information?" As a seller you're free to disagree with your broker, and we've certainly done that several times so far, but at least he can be helpful in trying to put you in the shoes of the potential business buyer.
One final note here today: Because I've been working at a client site on another project, Jack and my wife have had to handle most of the paperwork related to this potential buyer, and because I'm working closely with several of our employees at this site, I've been very careful about taking Jack's phone calls. After the first call I put the phone on vibrate, and while he probably called me five times, I only answered the first two times, finally calling him back later in the day when I was alone. I'm very concerned about my employees seeing any changes in my behavior, and it's also hard to answer Jack's questions when I'm in the room with several employees.