Deal Rumors: Deny Deflect, and Disclose
ArticlesMarch 2016

Deal Rumors: Deny Deflect, and Disclose

By Tom Zucker,

Rarely am I able to suggest that anyone follow the example of a politician, but these unique creatures show ways that people often handle sensitive communications during an M&A process. During every campaign cycle, we observe numerous candidates perfecting the time-tested techniques of denying and deflecting challenging questions. Although I despise politicians’ verbal maneuvering and lack of transparency, I respect how they achieve their main objective of preventing discussion of a topic that they want to avoid. With this background, below I consider several methods that people use to handle the most sacred truth…my company is for sale!

“I have no idea where they would have gotten that idea”, “Just rumors”, and “My company is not for sale”, are just a few of the common responses that an owner will use to deny the fact that indeed, their company is for sale. The outright denial is a common technique to refute the rumors. A denial might be appropriate where an owner is legally bound by a Confidentiality Agreement with a buyer (e.g., a publicly traded buyer) not to disclose that a transaction is in process. This approach often does not feel consistent with the character of the owner, but certainly would make a politician proud.

Typically, early in a sale process, the business owner will deflect questions and observations. Recently, the V.P. of Marketing for a client of ours approached the business owner with the comment, “I recently heard from a supplier that our company is on the market”. Despite the efforts of a skilled investment banker using code names, Confidentiality Agreements, only contacting senior level executives, and demanding a very tight timeline, occasionally someone in this chain of communication will breach confidentiality regarding the deal. Our client was disappointed in the realization of a breach, but was forced to respond quickly. He confidently responded to the executive, “Everything in life is for sale at the right price.” In this example, the deflection seems to have satisfied the V.P., but there is no certainty that the owner’s answer completely dismissed the V.P.’s lingering concerns (or those of others involved).

Many business owners utilize some of the previous approaches in the early stages of the sale process and then eventually disclose the sale prior to Closing. The later in the process that an owner can disclose the fact a sale is likely to occur, the less likely it is that employees, competitors, or other parties not directly involved in the negotiations will influence the outcome. Typically, an owner will notify a few key managers early in the process to provide proper insight and support, and then expand the number of internal people aware of the pending event as buyer interest and offers solidify. The disclosure to customers, other employees and family members is often deferred until just days or weeks prior to the closing of the sale. An owner must resist the desire to share the good news and defer disclosing until they are ready to handle the barrage of inquiries, questions and concerns and the deal has sufficiently solidified. As one would expect, it is often those with less facts and control that will worry the most and often extend their anxiety and uncertainty to others who would be impacted by the sale. It is human nature to fear uncertainty and circumstances beyond one’s control.

In order be prepared for questions about the sale before you have raised the issue, an owner should work with their investment banker to be prepared. Developing a communication plan at the start of an engagement is critical. The owner should have a truthful answer prepared for various inquiries, depending upon who raises the issue (i.e. employees, customers, suppliers). The answer may be slightly different for each or perhaps a consistent answer will be needed- each deal is different. It does not happen often, but being confidently prepared to answer the question of whether a company is for sale can be rehearsed and to properly address the inquiry.

In business, as in life, communication can be everything. During the sale process, this statement is even more evident and true. The intensity of emotions that a business owner has as he or she begins to think about selling “their baby” is very high. The key managers anxiously observe private conversations and unusual requests while thinking to themselves about the security of their job. The advisors (i.e., attorneys, accountants and bankers) strive to protect and advise long-time clients, but they are also motivated to preserve their future business with their client. It is in this environment that a skilled investment banker works, and why deal communications are so critical to a successful transaction. Preparation of a communication plan for this process may not qualify a client to run for political office, but will certainly give them comfort that they are answering with integrity in a manner that does not jeopardize the success of the sale.

© Copyrighted by EdgePoint. Tom Zucker can be reached at 216-342-5858 or via email at