When another business approaches you about buying your business the first step is to only talk in vague and general terms until you consult your attorney. Your attorney will tell you what you can disclose and when and what the risks are in disclosing the wrong kind of information or disclosing information at the wrong stage.
Your attorney will draft a non-disclosure or a confidentiality agreement for you that will protect you from having the person who’s interested in buying your business use the information that you disclose to your disadvantage.
For example, typically the person that’s interested in buying you is a competitor. Now, you wouldn’t disclose to your competitor the names of your biggest customers, the current financial condition that you’re in, the names of your key employees or certain processes that you’ve created that make your business better than someone else’s.
So why would you just willingly disclose all of that just because they said they want to buy you? The answer is, you shouldn’t! In order to properly protect yourself you need a non-disclosure agreement.
The next thing that you need to know is that in order to capture the deal that you think that you’ve negotiated you need an attorney to draft the letter of intent. The letter of intent will narrowly tailor the reasons that the deal might not go through and will provide other protections that will go in the final definitive agreements.