As a general rule, when an entrepreneur wants to sell his business, he does not want third parties – bankers, customers, suppliers and employees – to find out about his intentions. Therefore, when a potential buyer (Prospect) asks a business broker for information about a company for sale, the Broker will make him sign a "confidentiality agreement" before giving him any sensitive information.
With the signing of the confidentiality agreement, the Seller of the business must receive from the Prospect the discretion and respect that guarantee that the confidential information received during the process is kept secret. As a legal instrument, the agreement has binding effects and, in case of contravention, it can be presented before the courts of justice to demand compensation for damages. The confidentiality agreement used by the Florida Business Brokers stipulates the obligations of the Prospect in relation to the information that is about to receive from the Seller, as well as its interrelation with the Broker that intermediates the operation. In summary, the most important aspects covered by the agreement are the following:
- Identification of the Prospect. When it comes to confidentiality, the Prospect is not only the Buyer but also the trusted persons who, for reasons of business practice, must know the details of the operation. These include employees, consultants, agents and representatives of the Prospect.
- Protected rights. Confidentiality encompasses the protection of certain proprietary information of Seller relating to Seller's operations, property, personnel, finances and other matters that are not public and are deemed proprietary and confidential by nature. The Prospect, by signing the confidentiality agreement, undertakes not only not to disclose the sensitive information received to third parties, but also not to use it for their own benefit.
- Unilateral agreement. The Florida Brokers standard contract is a commitment made only by the Prospect to guarantee the Seller the fulfillment of several promises related to confidentiality. The Seller does not sign the agreement.
- Broker signature. The Business Broker could also sign the contract to evidence its agreement with the terms set forth by the Prospectus, as well as to attest that its remuneration will be covered by the Seller.
The Broker is the person who links the Seller with the Prospect and who coordinates the negotiations of both during the entire buying and selling process. Therefore, in addition to the legal effects of protecting the confidentiality of the Seller against third parties, the agreement brings the following favorable consequences for the business broker:
- The right of exclusivity of the Broker against the Prospect is established, with respect to the business presented.
- Due to its key function, the Broker is entitled to the possible payment of a commission on the sale price by the Seller and this is stipulated in the agreement.
- You receive in the confidentiality contract the guarantees that for two years from the date of introduction of the Prospect your eventual commission will be guaranteed.
The signing of the agreement is the first step of the induction process through which the Broker will make the Prospect go through before becoming a Buyer. That is when the Broker will gauge the Buyer's willingness to abide by Florida's generally accepted standards for business dealing or if, on the contrary, he is a complicated and difficult person.
It is crucial that the Broker determines the magnitude of the Seller's desire for confidentiality and achieves the pertinent minimum degree of protection in the agreement. Extensive and extremely legal-laden confidentiality agreements are often a turn-off for potential buyers. There are some extreme cases where the Seller has expressed to his staff a desire to sell his business and others where there is no information to protect. In those cases, it is obvious that "throwing current" in sophisticated confidentiality agreements is not justified.
There are some extreme cases in which the seller has indicated to his staff, customers and suppliers the desire to sell his business and other cases in which there is no information to protect. In these situations it is obvious that "throwing current" in sophisticated confidentiality agreements is not justified. Although “there is no secret that time will not reveal”, as the poet Racine pointed out, the confidentiality agreement is of paramount importance because it protects the owner of the information and the broker from him for the time necessary to not put the business at risk. *Business Broker. Alfred@negociosenflorida.com