It is important to business owners to maintain confidentiality when selling their business. Owners don’t want their employees or their competitors to know that their business is for sale. Let’s explore some key elements of a confidentiality agreement.
Type Of Negotiations
This should be at the top of your confidentiality list. This element is important because it stipulates whether the negotiations are secret or open. This part of the agreement outlines what information can be disclosed and what information cannot.
Duration Of The Agreement
It must state very clearly about how long the agreement is in effect. You should try to make your confidentiality agreement permanently binding.
Steps To Take If A Breach Occurs
You will want your confidentiality agreement to outline what steps to take in case a breach does occur. This will help the effectiveness of your contract. Outlining this in your agreement will help make your prospective buyers take the document seriously.
Special Considerations
These are elements that apply to the business. One example of a “special consideration” is patents. You will want to make certain that prospective buyers realize that they must maintain confidentiality regarding any patent related information.
State Laws
Include any applicable state laws. Address this issue if the prospective buyer’s location is outside of your state.
It is important that all parties understand that a confidentiality agreement is a legally binding contract. You would be wise to invest the time and money to create a professional confidentiality agreement. It is time and money well spent. The EBIT Associates team takes confidentiality agreements seriously. We vet and pre-qualify all prospective buyers.