First, I will not disclose any information about your business or even the fact that you are a client without specific instructions from you about whom I may tell and what information I may present to that person or persons.

Second, I may ask you at the end of an assignment if I may use your name and company name as a reference. You may accept or decline.

Third, I will sign a standard confidentiality agreement if you have one, or I can provide one for you for a nominal charge.

Fourth, if you complete any information on the web site, I will not sell, give away, or otherwise distribute that data in any way.

Now that we have that understanding, let me share some real world experience about the un-likeliness of maintaining complete confidentiality.

You have a very good chance of completing the "How to Value Your Own Business" course, using the Business Valuation Calculator, or getting the Summary Business Valuation done without losing any confidentiality.

These comments apply mostly to a Business Valuation, Business Appraisal or the process of putting your business up for sale. Once you start taking any actions out of the ordinary, the rumor mill or grapevine (whichever you call it) in your office will start generating all kinds of rumors, some right, some wrong, some maybe outlandish.

These actions may include asking office people for past financial statements, having closed-door telephone conversations, or holding private meetings with outside professional advisors that are outside of the ordinary course of business. Any strangers on your premises that are not customers or vendors cause employees to talk and speculate, especially strangers wearing business suits.

While technically this talk is not a breach of any confidentiality, frequently the rumors are close to being accurate. Right or wrong, they can become very destructive to the morale of your employees if left unchecked.

Another source where confidentiality may be compromised is by the non-professional staff of outside advisors that are working with you. Your professional advisors should always respect your confidentiality and privacy. They will insist that their staffs also maintain complete confidentiality. However, a reality check is often needed here. I find the larger the outside institution is, the more apt there is to be some idle conversation, sometimes very innocent, but very revealing.

I recall a situation where a banker's administrative assistant told the first partner in a company that their loan package was ready and could be picked up at the bank at any time. That first partner knew nothing about the package. The second partner had applied for a loan to buy out the first partner and was waiting for the package before approaching the first partner. Sparks flew big time! Their partnership and their friendship were both dissolved with a big loss in the value of the company.

Your vendors' sales personnel may also spread rumors about potential changes in other businesses. Some sales people believe these rumors enhance the value of their presence and make calling on customers easier. As a word of caution, remember that sales persons who tell you rumors about other companies are probably telling their other customers about you.

As the owner, you may be the last person in your company to become aware of the rumors. For non-threatening scenarios such as estate planning, gifting, additional financing, stock buybacks, etc., I recommend that employees be told what is going on. They do not need a lot of detail, just a summary.

For example, you might say; "We have a visitor coming tomorrow. He is helping us prepare a business valuation for our key man life insurance policy. Please make him welcome." You need to only tell two or three people and let them know that the information is not confidential; they will spread the word.

Under situations where there is some kind of an adversarial relationship occurring such as a divorce or dissenting stockholder, the employees are probably very aware of the situation anyway, and again a brief explanation is all that is needed.

If the situation involves a possible sale of the company, it is best not to say anything until you sense that the rumor mill is in high gear, or you are approached directly. Your intentions will leak out in some manner before closing regardless of written confidentiality agreements and the like. In twenty-five years of doing deals, I have never seen or heard of a deal being completed without most of the employees already being aware of at least some of the details.

I recommend that owners try to dismiss early inquiries by nosy employees with some light reply such as, "Everything I own is for sale except my wife and my golf clubs - and I know I am going to keep my golf clubs." Notice, that the levity evaded answering the question directly and the owner did not deliberately lie to the employee.

However, this evasion cannot last too long. When it becomes obvious to the employees that something is afoot, my recommendation is to tell the employees that the company is considering additional investors and/or investment in the company in order to grow better and provide stability for the employees' jobs in the future. Again, there is not a lie, ever though the investor may end up owning all of the company.

Turn the possible events into a positive for the employees. Do not fabricate an out and out falsehood to the employees. After the sale of your business, you may see those people at church, in the local coffee shop, or on the golf course. If you have deliberately deceived them, you may jeopardize future relationships with them or their friends.

As a buyer, I would be very upset if I found out that during our negotiations a seller had told the employees that the company was not considering a sale or at least additional investment. When I, the buyer, come into the picture after the sale there will be immediate employee resentment and distrust towards me that is not my doing. For me as a buyer, that possible drop in morale reduces the value of the company today.

Certainly privacy and confidentiality are issues that should not be ignored. However, it is naive to believe that you can maintain complete confidentiality throughout a business valuation, business appraisal or the pre-business sale process.