Why A Non-Disclosure Agreement Is Necessary for an M&A Deal

20dec26

A merger and acquisition deal is unique in many ways. The transaction usually takes place between the business owner, who in most cases is also the founder of the business, and the person who has invested lots of time and energy into building the business and another person or company. This means that one of the parties knows everything about the business that makes the object of the transaction, while the other has much less knowledge about how that business used to be run. This particular set-up requires the protection of vital business information, such as knowledge of financial aspects, to products and patents, as well as to clients and business processes. When I was researching how to sell my business, I learned that the best way to ensure that protection is through non-disclosure agreements.

A non-disclosure agreement is a legally binding contract in which the parties agree that either party cannot disclose specific types of sensitive information. The documents need to be drafted by an experienced team of legal experts to address the transaction’s particular features to be completed. The documents usually need to be signed by the seller’s relevant employees and the buyer’s employees.

 

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