In the business world, signing confidentiality agreements or Non-Disclosure Agreements (NDAs) is common practice, especially during M&A processes. These agreements allow commercial, financial, legal or strategic information to be shared between the parties, setting the conditions for its use and protection.
Types of non-disclosure agreement
Essential aspects it should cover
Common exceptions to confidentiality
What is an NDA?
An NDA is an agreement whereby one or more parties commit to protecting certain confidential information, limiting its use to a specific purpose and preventing its disclosure to unauthorised third parties. In M&A transactions it is especially relevant because it allows financial, commercial, legal, tax or operational information needed to value and negotiate the deal to be exchanged.
Only one of the parties discloses confidential information and the other assumes the main confidentiality and use-limitation obligations. This is common, for example, when a seller shares information about the company or business with a potential buyer.
Both parties exchange confidential information and assume reciprocal obligations regarding the information they receive. This can be appropriate when the buyer and seller both need to share sensitive information during the negotiation.
Three or more parties are subject to confidentiality obligations, for example, when several shareholders, investors or other parties are involved in the same transaction. The agreement sets out what information may be shared, with whom and under what conditions.
Essential aspects
Non-disclosure agreements must be precise and detailed, addressing the essential aspects that ensure effective protection of the information.
Explicitly defining the agreement’s “purpose” and what counts as “confidential information” avoids ambiguity and gaps in protection.
The agreement should address situations where disclosure is permitted, such as legal requirements or specific regulations.
The term of validity should be specified, along with clauses on returning and/or destroying the information once it ends.
Clearly define who the disclosing and receiving parties are, their obligations, limits on use, and who their authorised representatives are.
The agreement should govern the consequences of any breach of confidentiality, including, where appropriate, damages, penalty clauses and other protective mechanisms.
Depending on the transaction, additional obligations may be included regarding contact with employees, clients or suppliers, hiring staff, exclusivity, non-circumvention or standstill.
Common exceptions
Common restrictive clauses
In certain transactions, the NDA may incorporate additional commitments intended to protect the parties’ position during the negotiation process. Their suitability, scope and duration should be assessed based on the characteristics of each transaction.
Why Seegman
We draft and review non-disclosure agreements tailored to each transaction, protecting your information from the very first contact.
We adapt the NDA to the type of transaction — unilateral, bilateral or multilateral — and to the parties involved.
We analyse agreements presented to you by other parties, flagging risky clauses before you sign.
We integrate the NDA within the overall legal strategy of your sale, investment or financing process.
The guide includes a practical analysis of the main aspects a non-disclosure agreement should cover and an indicative NDA template.
The NDA is only the first step in a transaction. Here are other services we typically handle alongside it.
A thorough review prior to the purchase of shares or assets.
Legal and tax design of sales, mergers and financing rounds.
Frequently asked questions
Before sharing any sensitive information with the counterparty, typically in the early stages of negotiation or due diligence.
In a unilateral NDA, one of the parties is mainly the one disclosing confidential information, while the other assumes the corresponding obligations regarding that information. In a bilateral or mutual NDA, both parties exchange confidential information and assume reciprocal obligations.
It depends on the nature of the information and the characteristics of the transaction. The duration should be set out expressly and may extend beyond the end of negotiations. Certain information, especially where it constitutes a trade secret, may require protection for as long as it retains its confidential nature.
The agreement may set out clear consequences, such as penalty clauses, financial compensation, or the possibility of seeking injunctive relief.
Yes. Depending on the transaction, it may include restrictions on contacting or hiring employees, clients and suppliers, non-circumvention clauses and, in certain transactions involving listed companies, standstill clauses.
Tell us about your transaction and we’ll help you draft, review or negotiate the right non-disclosure agreement.
This information is provided for informational purposes only and does not constitute individualized legal advice. The content and scope of an NDA should be tailored to the specific circumstances of each transaction.
