NDA minimum requirements, non-disclosure agreements, confidentiality agreements or confidentiality deed minimum requirements are widely used in all business sale transactions to protect the interests of both the buyer and seller. Middle market and large business sale transactions tend to have more detailed NDA’s than smaller businesses and for very good reason.
Naturally any buyer would want to ensure that not only is their own confidential information protected but should they succeed in acquiring the business, other unsuccessful buyers or interested parties are restrained by the confidentiality agreement. The seller also wants to protect their confidential information and intellectual property from possible competitors and may want to keep the potential sale of their business confidential and restrict this information to approved parties only.
NDA Minimum Requirements
The key requirements to be included in business sale NDA’s are as follows:
- Limit who can access the confidential information within the prospective buyer – only those directly involved in the transaction and their advisers
- Define what is confidential information
- Information security and responsibility and return and destruction
- Information use is only for the purposes of the transaction and may not be used for business gain
- Not to disclose the name of the company and not to make any public announcements
- Non-solicitation of employees, customers or suppliers and not to make direct contact with any unless approved
- Respect of the privacy of information and law (including salaries and other sensitive information).
- Applicable law and jurisdiction plus: and,
- Term of the agreement – generally from one to three years
- Signing blocks to have the correct entity or individuals
NDA’s need to be comprehensive to secure the interests of both parties. Lengthy detailed documents can be a hurdle but parties with a real interest (a good first filter) will review or have their legal team review the agreement. The nature and behaviour of the review of the NDA will also give you a hint of what it would be like dealing with a buyer prospect! It is important to ensure that confidentiality agreement is comprehensive, use the above NDA minimum requirements as a first filter and have your lawyer review to ensure your agreements cover your specific transaction requirements and that it is clear plain English and easy to understand.