M&A non-disclosure agreement

M&A Non-Disclosure Agreement – Main Hints

It’s nice to brag about success in business. And almost always such stories are carefully listened to by competitors. That is why it is very important to know how to M&A non-disclosure agreement.

What Should a Non-Disclosure Agreement Include?

Let’s analyze what happens when agreements are negotiated or when people are hired. Whatever draconian provisions are prescribed (the rules are mostly dictated by the stronger side), they rarely become the subject of lengthy discussions – the weak side accepts these conditions, bearing in mind the likelihood of negative consequences for disclosing information prescribed in such agreements. This happens not because the party plans to strictly observe the confidentiality regime, but due to the lack of a well-established practice in the country of bringing violators to justice for such acts.

Mergers and Acquisitions are one of the most important aspects of the world of corporate finance, the main value of which is that, when combined, companies have greater financial value and market demand than when operating separately.

M&A non-disclosure agreement usually includes:

  • data on contractors and terms of contracts;
  • information obtained by an outsourced specialist, such as a business consultant;
  • marketing strategy, data on advertising companies, statistics on promotions;
  • pieces of the program code of the site or the entire code.

If confidentiality conditions have been violated in a contractual relationship of M&A non-disclosure agreement, you can use the opportunity to delay (cut) a certain payment under the main contract in favor of the violator as a penalty. This, of course, should be provided for in the provisions of the contract on the procedure for payment. In addition, the contract should stipulate the unilateral right of the disclosing party to record these violations and reduce the number of payments.

How to Maintain Confidentiality in M&A Non-Disclosure Agreement?

Starting with due diligence and negotiations between the investor and the owner of the company, and ending with the drafting of possible agreements for the purchase of a company or similar transactions (mergers, demergers), competent support in the field of mergers and acquisitions is needed. This also includes legal advice in the early stages when you are just entering into an agreement of intent or a non-disclosure agreement or when you are faced with the question of how to structure a deal.

Taking into account issues of maintaining confidentiality, a decision will be made as to what form the corporate transaction should take: a transaction to acquire shares or shares, possibly as an asset acquisition transaction or in some other form. This also includes labor law issues, which should be covered equally.

M&A non-disclosure agreement typically contains the following hints (the list is not exhaustive):

  • that preliminary negotiations on the takeover of the company are being held between the parties;
  • if the negotiations are exclusive (with the exact period of exclusivity);
  • what conditions allow the parties to terminate negotiations;
  • latest acquisition completion date;
  • conditions that must be met (in general, due diligence has been carried out) in order for the parties to proceed to the next stage of the acquisition.

During the merger and acquisition negotiation phase, the parties often sign a confidentiality (non-disclosure) agreement to ensure that any confidential information transferred in relation to the proposed purchase remains secret. Thus, the supplier reduces the risk of public disclosure of the information provided. To minimize the risk further, penalties are sometimes included in the agreement.