A small business is defined as a business with an annual turnover (which includes income but not capital assets, capital gains or sales of capital assets) of $3 million or less.
If you are the owner of a small business and are considering putting your business on the market you should consider taking precautions to protect your confidential information.
Confidential information may include customer lists and confidential processes and procedures which are very important to the goodwill of your business.
Normally a contract for the sale of a business will have a special condition which can protect confidential information from the time of exchange until settlement, there is no such protection before exchange of contracts. A potential purchaser will normally carry out due diligence on your business before exchange of contracts. It is recommended that a small business owner protect their confidential information by requiring any potential purchaser to enter into a Confidentiality Agreement before being given access to information which may be used to the detriment of your business.
Such an agreement will stipulate who the information can be disclosed to, the purposes for which the purchaser may use the information and the security and return of the information.
The contents of this article are general in nature. For advice specific to your circumstances, please contact your legal practitioner.
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