Key Insight
The NDA is not a formality — it's a real obligation. Using information learned in due diligence to compete with or harm the seller's business is a breach. But NDAs don't prevent buyers from walking away for any reason, including information they learned under NDA.
What an Acquisition NDA Covers
A well-drafted acquisition NDA covers:
- All information disclosed about the business: financial, operational, customer, employee, and strategic
- The existence of the sale process itself (non-disclosure of the fact that the business is for sale)
- Restrictions on use: information may be used only to evaluate the acquisition
- Non-solicitation: buyer cannot recruit the seller's employees using information learned in the process
- Exclusions: information already publicly known, or independently developed by the buyer, typically excluded
What NDAs Don't Prevent
- The buyer from deciding not to pursue the acquisition
- The buyer from sharing information with advisors (attorneys, accountants, lenders) bound by their own confidentiality obligations
- The buyer from using general market knowledge gained separately from the disclosure
Confidentiality vs. Non-Solicitation
Most acquisition NDAs include a non-solicitation provision preventing the buyer from recruiting the seller's employees during and for a period after the process — even if the deal doesn't close. This is distinct from the confidentiality obligation and survives an NDA breach by either party.
Duration
NDA terms typically survive for 2-3 years from signing. The obligation doesn't expire when the deal closes (or fails to close) — it runs for the stated term.
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