Before any serious M&A negotiations begin, one thing must be in place: a solid Non-Disclosure Agreement (NDA). Also known as a Confidentiality Agreement, this document protects sensitive business information shared during discussions and due diligence.
At Hadri Law, we ensure our clients enter negotiations on a secure footing by drafting and reviewing NDAs that safeguard what matters most your competitive edge.
Why an NDA Matters
M&A discussions often involve revealing proprietary data such as:
- Financial statements
- Customer contracts
- Intellectual property
- Employee information
- Strategic plans
Without a signed NDA, there is no legal barrier preventing the other party from using or disclosing this information, even if the deal doesn’t go forward.
Key Clauses to Include in an NDA
Whether you’re the buyer or the seller, a well-drafted NDA should cover the following essentials:
1. Definition of Confidential Information
Be clear about what is protected. This typically includes all written, oral, and electronic information disclosed during discussions, but should exclude:
- Publicly available info
- Info already known by the receiving party
- Data independently developed without using confidential material
2. Permitted Use
Limit how the other party may use your information usually only to evaluate the proposed transaction.
3. Non-Disclosure Obligation
Prohibit the receiving party from sharing the information with third parties, except with advisors (e.g., lawyers, accountants) who are also bound to keep it confidential.
4. Term and Duration
Set a time limit for how long confidentiality obligations last. This can range from 12 months to 5 years or longer, depending on the industry and the sensitivity of the data.
5. Return or Destruction Clause
Ensure the receiving party must return or destroy all confidential information if the deal falls through.
6. No Solicitation or Poaching
Consider adding a clause to prevent the other party from soliciting your employees or clients during or after negotiations.
7. No Obligation to Proceed
Clarify that neither party is obligated to continue discussions or complete the deal the NDA simply protects shared information.
8. Remedies for Breach
Include provisions that allow for injunctive relief if there is a breach, recognizing that financial damages may not be sufficient to protect your business.
Mutual vs. One-Way NDAs
- Mutual NDA: Used when both parties are sharing sensitive info common in two-sided negotiations.
- One-way NDA: Used when only one party is disclosing confidential information often the seller in early-stage talks.
Hadri Law can help you choose the right format and align it to your situation.
Pro Tip: Don’t Reuse Templates
Using a generic NDA template without understanding its legal implications can be risky. NDAs should reflect the nature of the deal, the type of information shared, and the jurisdictions involved.
How Hadri Law Can Help
We assist clients in:
- Drafting and negotiating NDAs that protect confidential information
- Reviewing NDAs provided by other parties to flag risks
- Aligning NDA terms with the overall M&A strategy
Whether you’re engaging with private equity, strategic buyers, or investors, we ensure your disclosures are legally protected every step of the way.
Final Thoughts
An NDA may seem like a formality, but it’s a foundational document in every M&A deal. Don’t expose your business to unnecessary risk by skipping or underestimating it. Protecting your information now could preserve the value of your company later.
Connect with Hadri Law at 437‑397‑2374 or contact@hadrilaw.com to arrange your free consultation and get the legal support you need.