A competitor is frequently the buyer who can pay the most, because they can strip out duplicated overhead and value your customers more than a financial buyer does. They are also the buyer who can do the most damage if the deal collapses, because everything you showed them is now known to a rival.
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Stage the disclosure
Nothing identifiable before a signed non disclosure agreement. Financial summaries without customer names next. Customer detail, pricing and contract terms only after a letter of intent, and the most sensitive material, such as a named customer list or supplier terms, released late and sometimes only to advisers rather than to the buyer's own staff. Each stage is a decision, not a formality.
Use the process to protect yourself
Approaching several buyers at once, including at least one who is not a competitor, does two things: it sets a price the competitor has to beat, and it means no single rival knows they are the only option. A competitor negotiating against nobody has every incentive to take their time and learn.
What to write into the NDA
A non solicitation of your staff and customers for a defined period, a return or destruction obligation, and a clause naming who inside the buyer may see what. These are ordinary requests and a serious buyer will accept them. A competitor who refuses a non solicitation is telling you what the approach is really about.
Other questions people ask
Should I approach a competitor first?
Only within a process with other buyers in it. Alone, they have no reason to move quickly or to pay a full price.
What if they walk away with my information?
That is what the non disclosure and non solicitation terms are for, and why sensitive material is staged. The practical protection is disclosing the most damaging items last and only when the deal is close to certain.
Do competitors pay more?
Often, because of the savings from combining. They also diligence harder, because they understand your business well enough to see the problems.