Non Disclosure Agreement Company Acquisition

An NDA is very important and useful for the seller (disclosure part), because the seller is the one who reveals a lot of confidential information about his business. They are more at risk when others learn about the information, as they may not create positive feelings from customers and employees. «The purpose of the agreement is to protect the confidentiality of information exchanged in the review and negotiation of the transaction and information exchanged by another party as part of the due diligence audit,» Eric H. Wang wrote in an article for DLA Piper. What is the purpose of one of these agreements? What protects them in general? Contracting parties are, as a rule, defined in a simple description established at the beginning of the contract. If this is an agreement in which only one page provides confidential information, the revealing party may be designated as a party to the publication and the recipient of the information may simply be designated as the recipient. Despite openings to several interested parties, an alleged seller may not have been able to attract a buyer on terms acceptable to the seller. In addition, bankruptcy deals occur; The parties can sign a Memorandum of Understanding and begin the path to possible support only for the buyer or seller, and stop talking with the other party. In both cases, a seller is able to communicate sensitive and private information to one or more third parties with whom the seller has ultimately not entered into a company transaction.

In order to better protect the confidential information disclosed, sellers generally require a party that is no longer interested in the acquisition to make confidential information common or to certify in an alternative way that it and its representatives have destroyed that information. Alleged purchasers may require that they be able to keep a copy of the confidential information shared for registration purposes; However, sellers can no longer have such accommodation (and rightly so in cases where confidential information has been disclosed to a competitor) and insist that all selected copies be kept in a secure file in the office of the alleged buyer`s legal counsel. Copies of confidential information produced as part of routine technical insurance in accordance with document recovery policies and procedures are generally excluded from the general rule that confidential information must be returned/destroyed.