When it comes to disclosing information to buyer inquiries, there are two very different schools of thought.
On one side, some advisors believe in laying everything out upfront. As soon as an NDA is signed, they release detailed financials—including tax returns, payroll summaries, and sometimes even employee lists. The logic is simple: let the buyer see all the information early so they can quickly determine if the business is a good fit. No time is wasted, no energy is spent chasing unqualified leads. That’s the appeal.
But the downside is real. Giving that level of access to everyone who inquires (many of whom are unvetted, unserious, or even competitors) opens the seller to unnecessary risk. It creates the potential for sensitive data to end up in the wrong hands. Confidential information should be protected, not used as a lead filter.
The opposite approach is much more guarded. This method offers very limited information at first. The idea is that the buyer should demonstrate their seriousness and qualifications before receiving any sensitive details. The tradeoff here is speed; some buyers drop off because the process requires more of them early on. But for me, that’s a feature, not a flaw, as it weeds out unserious buyers.
Capstone's Approach
My process leans toward the "slower", more protective approach. But in reality, the advisors who dismiss this method as slow usually just don’t want to do the work involved. This is how I would want it done if I were the seller because in fact, when I sold my own fire protection business, this is exactly how I did it.
I didn’t want just anyone who inquired to get access to my tax returns or payroll records. That’s crazy. While I understand the appeal of getting everything out in the open early, it’s far too risky for sellers. Frankly, the only reason some firms take the “all upfront” approach is because it’s easier. It saves them from having to screen buyers, hold intro calls, or manage a staged release of information. It’s a model designed for volume, not a hands-on approach. It’s also a model that puts the seller in a vulnerable position just to make the advisor’s life easier.
That’s not how I work.
Here’s how I do it, step by step:
1. Initial Inquiry
The buyer signs an NDA and fills out a buyer profile. This step alone tells me a lot. Nine times out of ten, I can determine how legitimate they are based on how they complete those two items.
2. Screening the Buyer
If their profile raises red flags, I send them along. They never see the business. If they seem like a good fit, I release a short Confidential Information Memorandum (CIM) that gives them a high-level view of the opportunity.
3. Initial Review
If they’re no longer interested after reviewing the CIM, we part ways. If they remain interested, I hold a call with them. This step allows me to assess how they communicate, how they think, and whether they’re trustworthy and serious.
4. Secure Data Room Access
Only after that call, and if they still look like a viable fit, do I give them access to a secure data room with more detailed financials. Even then, tax returns are not included.
5. Seller Introduction and Final Review
If they’ve made it through all those steps, and I’m confident in their legitimacy, I introduce them to the seller. At that point, and only with the seller’s approval, the buyer can review tax returns and other final documents.
This process isn’t fast for the sake of being fast. It’s thorough, protective, and designed to benefit the seller. I’m not trying to close a deal with just anyone—I’m trying to find the right buyer for the business.
Conclusion
This approach is a far cry from the “send the tax returns with the CIM” model. It’s more work, yes. But it’s the responsible way to handle confidential information.
Think of it like a game of tennis. I serve, they return. I share a little, they respond with interest. We rally back and forth, and only when it becomes clear we’re a good match do we move to the next step. That’s how trust is built, and that’s how successful deals get done confidentially.
