What to do about a potential buyer requesting a “comprehensive client list”?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
What to do about a potential buyer requesting a “comprehensive client list”?
I am selling by business after 15 years. A potential buyer has requested a “comprehensive client list”. I have provided much financial information but am hesitant to provide this client list since I have no idea how it will help with their decision making or where it might end up. Am I being paranoid or is this a standard request for a potential buyer?
Asked on August 3, 2010 under Business Law, Idaho
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
It's both--it is something that can help make their decision, and you're right to be paranoid.
How it can help: they want to make sure that the business is sustainable without you, or indeed generally viable. If you are overly dependent on a small number of clients, or on clients with whom you have personal ties, then the business may not be viable.
Why its right to be paranoid: your client list is one of your business's most valuable assets. Someone else could take it and market to your clients.
You may need to provide this if they want it--as noted, it's not unreasonable--but should have a VERY strong nondisclosure/confidentiality agreement in place first, one that provides for both an injunction and damages. A business attorney can draw one up for you.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.