GW Equity

M&A Advisors Preserve Confidentiality in Wider Market

One of the most important and valuable services a merger and acquisition specialist provides is confidentiality for the seller.

Sound business principles make confidentiality necessary. Without confidentiality, bad things can happen:
Competitors can use the imminent sale as a tool to shake customer trust.
Key employees may mistake the prospective sale as a threat to their own interests and leave the company just when their loyalty is most valuable to the buyer as well as the seller.
Various interests, even including well-meaning vendors, landlords, lenders, may interfere with the process seeking to pursue their own objectives.

The business owner can achieve a degree of confidentiality by discretely offering the sale of the company to a handful of likely buyers, requesting their silence in return for the details and data they need to make an informed judgment about the offer. One problem here is that the seller must find potential buyers without benefit of a full array of good prospects. Unless prospective buyers sign special confidentiality pledges, they may or may not abide by their promise of silence.
Better yet, the owner wanting to sell a company in the most favorable setting will retain a M&A advisor to handle all the details, including the crucial question of confidentiality.

GW Equity has identified three types of auction that enable a seller to effectively avoid the risk of leaking information about the intended transaction:
Full public auction is designed to reach a broad array of prospects with to disclose that an anonymous company with defined characteristics is for sale. This approach allows for a fully competitive process while protecting confidentiality as much as possible.
Controlled auction limits the offering notice to a short list of logical buyers in behalf of sellers concerned about shielding their plans. Here there will be a competitive environment in which confidentiality can be maintained.
Bilateral negotiation is for unique or highly complex business sales where there will be one buyer. There is complete confidentiality.

Experienced M&A advisors know the importance of discretion. They insist that all participants pledge their commitment to be confidential before they can advance to direct knowledge of the company on offer. (Typically, prospective buyers have their own reasons for wishing to protect their identity as well as that of the company they are considering.)

Once GW Equity has a list of prospective buyers who have expressed interest in acquiring or merging with a company, the advisors ask them to sign pledges of confidentiality. Those who sign move to the next stage.
“It is awkward for an owner to take a company to market without an intermediary,” explained Dwight Jacobs of GW Equity. “The identity of the company is revealed up front. The owner must be prepared to deal with the consequences of losing an important competitive advantage. That could be costly.”

On the other hand, GW Equity can make an attractive presentation in behalf of an anonymous company. Prospective buyers look objectively at what is offered and make judgments knowing that GW Equity will help them learn as much as they need to know while it continues to protect the confidentiality of the company’s owner. Prospective buyers have GW Equity’s assurance that full disclosure will occur as soon as possible and under terms of continued confidentiality that are universally accepted in the business world.