How do I manage several interested buyers at once?

BDC describes the sale path as buyer interest, then a non-binding letter of intent from a serious buyer, then due diligence, then a binding purchase agreement. Managing several buyers means keeping each of them in that sequence and not giving any one a binding advantage before you have seen the others. Treating buyers the same way also makes their offers easier to compare, and it gives you a record of what each one received. The NDA guide covers the agreement itself.

Same paper for every buyer

BDC notes that a letter of intent is very often preceded by a confidentiality agreement, in which a party undertakes not to use or disclose confidential information except to evaluate taking part in the transaction. Have each buyer sign its own agreement before it sees anything, and keep a list of who received which documents. Ask your lawyer whether the agreement should also cover contact with your staff, customers and suppliers.

Personal information in the data room

Customer and employee records contain personal information. Under s.7.2(1) of PIPEDA, in addition to the circumstances in s.7(2) and (3), organizations that are parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if conditions are met. The parties must have an agreement requiring the recipient to use it solely for the transaction, protect it, and return or destroy it within a reasonable time if the deal does not proceed, and the information must be necessary. To rely on s.7.2(1) with each buyer, you and that buyer must have entered into such an agreement, and under s.7.2(4) it does not apply where the primary purpose or result of the transaction is the purchase, sale or other acquisition or disposition, or lease, of personal information. Provincial privacy laws may also apply.

Exclusivity is the step to slow down

BDC says a letter of intent outlines the proposed price, key terms and the exclusivity period for due diligence, and that where it so provides it can create binding obligations on exclusivity and confidentiality. If you grant exclusivity to one buyer, find out what it stops you from doing with the others and what happens if that buyer withdraws. Before you sign, ask each buyer to state in the same format its price, structure, conditions, financing and the due diligence it expects.