We live in a society where it is challenging to keep information private. Confidentiality is crucial to many types of business transactions. For example, a business is looking to sell or merge with another company. During negotiations, sensitive business information such as client lists, proprietary formulas and pricing information may be disclosed by the selling business. What happens to the sensitive information if the deal falls apart?
In this situation, the information of the business is valuable and must be properly protected. The players involved want to have as much information as possible before deciding to move forward. For all parties to be able to evaluate the proposed transaction, each party must share its necessary information. However, they must ensure that sensitive information is protected from unwanted disclosure to parties outside the transaction. The way to protect the sensitive information for all parties to the transaction is for the parties to sign a confidentiality and nondisclosure agreement (“NDA”)
Frequently NDAs are signed when companies or individuals need access to company information to be able to evaluate the potential business relationship. Once the parties have agreed to move forward, execution of an NDA to protect sensitive and confidential information should be the next step of the business transaction.
An NDA is a binding written agreement that states the parties’ agreement not to disclose and use confidential material, knowledge, or information that the parties share for purposes such a potential business sale or merger while restricting access to or by third parties to the transaction. An NDA creates a confidential relationship between the parties to protect confidential and proprietary information including trade secrets and business information that is not publicly known.
Typically, confidentiality agreements will address the definition of confidential and proprietary information and state the duties of the party receiving the information. Confidentiality agreements are vital to a more complete investigation about a prospective business transaction. NDAs allow the parties to speak more freely to one another and lessen concern for improper disclosure of sensitive business information to the public which may harm the economic interests of the business.
For assistance with an NDA and your business purchase, sale or merger, contact Lisa Wills, Law Offices of Lisa Wills is a Pleasanton, California. Our Firm focuses on business transactions, advice and litigation avoidance. We will assist you assess business sales, purchases and mergers while protecting proprietary and confidential information from public disclosure with a well drafted non-disclosure agreement.
Call the Law Offices of Lisa Wills at (925) 463-9000 or send an email today to learn how to protect your business and its sensitive data and obtain skilled guidance through your business transaction.