Non-Disclosure Agreement (NDA)
A legal contract protecting confidential information shared during M&A negotiations and due diligence.
Full Definition
A Non-Disclosure Agreement (NDA), also called a Confidentiality Agreement, is a legal contract that protects sensitive business information shared during M&A discussions.
Key NDA provisions:
- Definition of confidential information
- Permitted use restrictions
- Disclosure limitations (need-to-know basis)
- Return/destruction of information
- Duration of confidentiality obligations
- Non-solicitation of employees (sometimes)
- Standstill provisions (for public companies)
- Announcement restrictions
Types of NDAs in M&A: 1. Unilateral: Seller discloses to buyer (most common) 2. Mutual: Both parties share information 3. Multilateral: Multiple parties (consortium bids)
Typical terms:
- Duration: 2-3 years post-termination
- Scope: All information provided, however disclosed
- Carve-outs: Public information, independent development
- Remedy: Injunctive relief available
UK-specific considerations:
- English law NDAs typically chosen
- Jurisdiction clause important
- Consider GDPR implications for personal data
- Financial promotion rules for regulated businesses
NDAs are typically signed before any substantive information (like a CIM) is provided and before data room access is granted.
Related Terms
Confidential Information Memorandum (CIM)
A detailed document providing comprehensive information about a business for sale to potential buyers.
Data Room
A secure repository where confidential documents are stored and shared with potential buyers during due diligence.
Teaser
A brief anonymous document providing high-level information about a business for sale to generate buyer interest.
Due Diligence
The comprehensive investigation and analysis of a target business before completing an acquisition.