An area of particular concern for sellers is the buyer`s solicitation of the seller`s staff. As part of due diligence, the alleged buyers are all presented to the seller`s key staff. In particular, in the event that an alleged buyer is a competitor to the seller, it is understandable that the sellers will ask the buyer that he cannot apply after the fact for the employment of these persons (or other contacts with these persons) for a specified period, which is usually between 1 and 2 years after the signing of the NDA. Buyers who are large organizations will often object to such a ban, citing the difficulty of tracking the organization`s hiring activities. A typical compromise is to limit the ban to seller executives or employees who have been specially presented to the buyer or with whom the buyer has been in contact during the negotiations. In addition, buyers will generally attempt to issue indirect requests from the seller`s staff, either through general online or newspaper advertisements or through the use of an external research company. A confidentiality agreement, often referred to as the NOA or confidentiality agreement, is usually the first agreement reached in the context of a merger and acquisition transaction. The agreement is intended to protect the confidentiality of the information exchanged in the course of the review and negotiation of the transaction and the information exchanged as part of the due diligence audit of the other party. In a situation where the NOA form is submitted to the other party, a thorough verification is warranted.
Below is a summary checklist and commentary on some of the most important points to consider when checking an NDA. The checklist and commentary refer to the “provider” and “recipient,” regardless of the buyer`s or seller`s part. While the seller is usually the “supplier,” the buyer may in some cases, for example. B when the buyer issues his equity as part of the reflection on the transaction, provide the seller with significant amounts of confidential information about the seller`s duty of care. If the italic prefaces “providers should” or “recipients should” are in favour of action to be taken during your review, you should keep in mind that commercial reasons may dictate the importance of certain provisions and the least relevance of others. The checklist does not contain all the issues you want to negotiate and is not a substitute for auditing by demanding AM consultants – it is simply intended to address some of the most common issues you should be aware of when auditing an NDA. General suppliers and beneficiaries should, from the recipient`s perspective, particularly as a potential purchaser, freely share the public party`s information with its staff, external consultants and, in some cases, its sources of equity and debt financing.