You are trying to buy a business and the most logical acquisition is a synergistic partner. You approach the company and they have agreed to talk to you but they are concerned about providing confidential information to a competitor. Both parties want to proceed but they do not know how to continue.
The best way is for two independent people to review the financial information. Often, the Companies will use their accountants. If they have a professional designation such as a CA, CPA, CGA or CMA, they have a code of ethics which they are bound to adhere to. Selected information is often provided to the accountant but no details on customers or profit margins per customers. If you are competitors, you may already know or guess who some of the target company’s customers are. If the accountant can review the information but not provide details to his or her client, then that can allow this business to be pursued. Initially, financial statements and some internal information may be provided. If the purchaser likes what he sees with the preliminary information, you continue with more information. If you come up with a letter of intent, then often the accountant will go into a room with the auditors to review the customer list and check out sensitive information but not be allowed to take any notes of the customers. That way, it preserves confidentiality in case the deal does not go through but at the same time, the accountant is able to do some due diligence on the information.
If companies are synergistic and many expenses are duplicated and can be eliminated, the best company to buy would be the competitor. However, sometimes there is no synergy and cost saving. This is rare, there usually is some savings, at least administratively that should generate some savings. If there is no overlap in customers or territories, then this may be a match made in heaven.