The M&A offering document should include information about Seller’s customers and competitors. This section, even if not completely thorough in its listing of customers and competitors, should include some information to entice the Buyer.
Customer names
As Seller, should you provide customer names in the offering document? Yes and no. In other words: It depends. Here are the arguments for both opinions:
No: Customer names should not appear in the offering document because they’re a highly sensitive bit of information, especially if Seller’s direct competitors are reviewing the offering document.
Yes: If Seller’s website or existing materials list customers or if the names of certain customers are otherwise public information, specifically mentioning those customers doesn’t hurt, especially if the customers are of the large and extremely well-known household names.
Whichever argument you follow, providing a full customer list in the offering document isn’t a good idea because you should disclose detailed customer information (name, amount of annual purchases, and so on) only after you’re reasonably certain Buyer will close a deal. For this reason, Sellers should wait until near the end of due diligence before providing the full, detailed customer list to Buyer.
Info about competitors
The offering document should also include information on Seller’s competitors. Seller needs to demonstrate to Buyer that it understands the competitive landscape. Additionally, this information may help a Buyer who’s new to Seller’s specific industry get an overview of the main competitors and assess the competitive risks.
In addition to listing competitors, the offering document should provide some insight into each competitor’s relative strengths and weaknesses, revenue size, and percentage stake (roughly) of the market.
If one of the listed competitors is also reviewing the offering document, that competitor instinctively goes to the competitor section and corrects, contradicts, or otherwise chuckles about whatever the entry says. No matter what Seller writes, the competitor will take some sort of umbrage with it. Wouldn’t you?