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Should Your Purchase Of A Business Be Confidential?

When you buy a business, it often makes sense to keep the transfer of ownership confidential. Whether it’s an equity or asset purchase, it rarely makes sense for existing customers to know ownership has changed.

Of course, there are exceptions to this general rule.

For example, if you plan to change the company’s trade name, customers are going to want to know why.

However, prospective and existing customers expect reliability. And ownership changes don’t create an image of stability but signify change instead.

If you’re buying a business and want to keep the acquisition confidential, make sure your purchase agreement contains enforceable nondisclosure provisions that reduces the risk the seller or someone else will tell others about your purchase.

Fortunately, these contractual provisions can be crafted by an experienced business lawyer to precisely the scope of what you want said and left unsaid about ownership and the transition.

What happens if you change your mind after signing the agreement? For example, you decide there’s a valid reason for letting everyone know you just bought the company. Sellers are often willing to amend the purchase agreement so that confidentiality no longer applies or is less rigid.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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