How to Ensure Confidentiality of Data During a Transaction
If you are buying or selling a business you will want to know how to ensure confidentiality of data, particularly when it comes to route business opportunities. A breach of data can not only give your competitor’s an advantage if the deal falls through, but you also risk losing or upsetting current employees who may be unaware of your plans to sell.
During what can be a stressful and emotional time, including a time-consuming due diligence process on both sides, you will need to make sure all information is safeguarded to the max. Here are a few tips on how to ensure confidentiality of data.
Bilateral Non-Disclosure Agreement: Both sides of the agreement restrict the sharing and use of information that is disclosed during the buying/selling process. This is particularly important at the start of conversations, as both parties are evaluating a potential business deal. This type of agreement will mutually protect data.
Fend off a Security Breach: You’ve read about the mega data breaches at Target, Home Depot, and others. But hackers are not just targeting big business. In fact, individuals and small businesses are often targeted at a higher rate, you just don’t hear about in on the nightly news. You will want to make sure that your Internet setup is ironclad: secure your web browsers, engage in data encryption and use protected email solutions to protect all data.
Establish a Security Policy: It might sound silly if you are a Corporation of One, but having defined rules and procedures surrounding data will help not only you but a potential business buyer too. It is not uncommon for potential buyers and/or clients to request a copy of your policy before doing business with you.
Automate Backups: Data that is stored digitally should be backed up regularly, preferably by an automated system. There are plenty of well-established third-party companies that specialize in setting up these systems for business owners and brokers.
Integrity and Instinct: Security systems and critical data are only as good as their maker. In general, when buying or selling a business, it is best to only interact with people and entities that you trust. If you see red flags, do not ignore them. Also, it is imperative to find out who is working for an organization you are trusting with your data. Many times, internal threats come in the form of employee negligence. You have every right to know who is handling your information.
If you are wondering how to ensure confidentiality of data if you own a business, you might want to look into hiring a security consultant to make sure you are adhering to modern day best practices.