Confidentiality Agreements: Mergers and Acquisitions

by Practical Law Corporate & Securities

This Note explores the essential aspects of confidentiality agreements in mergers and acquisitions (M&A), detailing their principal provisions and key considerations. One of the first agreements signed in most M&A transactions is the confidentiality agreement (or NDA). This Note examines whether an agreement should be unilateral or mutual, the timing of signing, and whether it should be separate from or part of the term sheet. It also discusses the importance of defining confidential information, permitted uses, and exclusions. Special considerations are highlighted for public companies, including standstill agreements, compliance with securities laws, and in the context of private equity deals, anti-clubbing provisions. The Note also addresses the limitations of NDAs and the remedies available for breaches. By understanding these elements, parties can better navigate the complexities of confidentiality agreements in M&A transactions.