It is not cunning, savvy or effective to hide things from buyers during their review of your company. It is not only ethically wrong but it will create very significant legal exposures.
The right thing (ethically and legally) is to provide full disclosure day one. The correct process commences by sharing the good – the bad and the ugly with your advisor. Then the two of you can determine a communication strategy that openly and honestly addresses all matters.
Any detrimental impact can often times be minimized or neutralized if properly communicated.
If it is not communicated it can trigger at worst a deal failure, and if not, a loss of buyer trust in the seller. That always leads to more work and more issues.
Our firm’s strategy is “we play offense and not defense.” Defense costs money with lawyers and purchase price losses.
You want to work with an honest forthright buyer. Conversely, the buyer deserves to work with an ethical fully disclosing seller.
In almost all deals it is not the buyers first deal. They have heard it all and they really have distain for spin and exaggeration. You absolutely want to project an image of trustworthiness.
You will realize a much better sales price and your likelihood of a successful closing goes way up.
The very best technique is to answer the buyers’ questions before they are asked.
An experienced advisor will know how to get out in front of the buyers (and stay there) informational requests. This technique highly impresses buyers and results in less information requests overall.
A well designed and populated digital data room that is aligned with the buyer’s due diligence listing order tremendously impresses buyers. Your advisor’s job is to make the buyers job as easy and effective to perform as possible.
Your advisor is really the information conduit between your company and the information the buyer needs to confirm the value of the company.
Buyers are extremely appreciative of this level of courtesy and professionalism.