Assume for a moment that you are a CPA determined to sell an accounting practice. From trade secrets to customer database lists, you are about to provide potential bidders and direct competitors with a host of confidential information. Can you imagine freely handing over these critical pieces of strategic information with no protection for yourself and your firm? Without a properly executed, well-drafted NDA, you are doing just that.
A nondisclosure agreement (NDA), otherwise known as a confidentially agreement, is the first step in an accounting business sale. It precedes letters of intent and purchase agreements in an effort to protect both the seller and buyer. NDAs ensure that the onslaught of sensitive information that is exchanged from the beginning of the process is shared in confidence.
Below are some general components to help you get started.
What Does a ‘Good’ Confidentiality Agreement Do?
Confidentiality agreements are designed to protect you when selling an accounting business. Not only do they restrict access from third parties, once the NDA is in place, everyone involved should have a clear understanding of what is to be kept ‘confidential’ during the sale of your accounting business. Special protections will typically be outlined for both buyer and seller. However, the NDA will typically focus on the prevention of information misuse by the person wanting to buy the CPA firm. A good confidentiality agreement will clearly limit a buyer’s ability to disclose information with the public or industry, contact your firm’s employees, customers, or suppliers, and dictate the only acceptable ways your information can be used. The NDA should also outline the consequences and legal ramifications in the event information is leaked or disclosed.
How Do NDA’s Facilitate an Acquisition?
NDA’s prevent scenarios when a buyer might otherwise disclose to the marketplace that you have an accounting business for sale. These thoughtless disclosures could cause customer loss, employee loss, and a lower sales price (find out why in our free report). An NDA also prevents potential buyers from divulging your financial information, propositioning your hard-earned customer base or employees and utilizing your business strategies to their advantage. Such information leaks can be especially detrimental should the proposed acquisition fall through. Until your sale is properly closed and fully transitioned, a confidentiality agreement is your only recourse.
Who Should Sign the Agreement?
Anyone with direct access to your sensitive proprietary information needs to read, understand and sign your confidentiality agreements. This applies to people wishing to buy a CPA firm as well as third party brokers. It can be a good idea to print extra copies so that anyone who will potentially review your accounting practice information knows the guidelines and consequences of even an unintentional disclosure.
What Kind of Information Should my Nondisclosure Agreement Include?
It is a good idea to sit down at the negotiating table with a predetermined list of information you want to keep confidential. This can be anything from key accounts, to customer lists, to intellectual property. Regardless of what you choose to outline, make sure your agreement expressly stipulates any information that you would not want falling into a competitor’s hands as “confidential.” These will bind potential buyers from sharing any information that could potentially thwart the sale of your accounting business or result in customer loss and outline what actions will be taken in the event of a breach.
It is advisable to utilize an attorney to prepare your NDA. In addition, a good business broker that specializes in the sale of accounting businesses should be able to provide you with a sample agreement to provide to your attorney.
At Accounting Broker Acquisition Group, Inc., we understand the importance of maintaining the confidentiality of your sensitive information with your customers, employees and vendors. We also understand how NDAs and confidentiality agreements play such a pivotal role when selling your accounting business.
It is why we provide all our clients with an exceptional level of absolute confidentiality protection. Our national accounting practice business brokerage is the only one of its type that is comprised 100-percent of brokers who are CPAs with significant “Big Four” merger and acquisition experience. Starting with the very first discussion or email communication, we uphold every word of our airtight Confidentiality Pledge – keeping you in control of what information gets shared with competitors, creditors and the like. Read our full Confidentiality Policy here, and let our qualified CPA practice business brokers actively promote, market and negotiate the sale of your accounting business.
Journal of Accountancy Article – Read our featured article to learn how to Maximize Value when you sell your accounting practice:
Click Now: https://accountingbroker.com/articles/
Receive the Free Report: “Discover the 12 Fatal Errors You Must Avoid
When You Sell Your CPA Firm”
Click Now: https://accountingbroker.com/areyouselling
Call or email now for free consultation to see what Maximum
Value could mean to the sale of your accounting practice: