This time of year, everyone is either still busy or on vacation enjoying some much-needed R&R so this is a very brief post today. I had several conversations recently with owners who are close to exiting. One thing we always cover with our clients is the need to protect the client list when going through the due diligence process. Here it goes in black and white:
“Please do not transfer possession of your full client list during due diligence.”
I know that trust is a key ingredient to getting deals to the finish line, but I’ve seen incredibly successful (shrewd in fact), CPAs disregard this guidance. It can be very difficult to say “no” to requests when you don’t want to do anything to hinder the progress of your deal, but this is not something most buyers will find problematic. They understand confidentiality, or they should. If they don’t, then maybe they shouldn’t be your buyer? There are ways to get the information conveyed without giving up the entire client list.
Think about this. If you were buying a firm, and you found out the full list had been provided to a previous prospective buyer, how would you feel about that?