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Practitioner's Complete Guide to M&As: An All-Inclusive Reference, with Website by David T. Emott

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Topic 9

Confidentiality Agreements

The exchange of information between parties considering entering into an acquisition transaction must be governed by confidentiality agreements that set forth the terms of what information is to be exchanged, what is and is not confidential, and the terms of nondisclosure of information exchanged. Information exchanged between competing parties requires special attention well beyond the exchange of confidentiality agreements.

ENTER INTO CONFIDENTIALITY AGREEMENTS EARLY

  • Enter into a binding nondisclosure or confidentiality agreement, as illustrated in Appendix 9.1, prior to entering into meaningful conversations with a prospective target about any aspect of M&A. Whenever sellers (and the buyer) will be disclosing confidential (excluding anticompetitive) information to facilitate the discussions in the search for complementary strategic interests that lead to a deal, they should have a binding confidentiality agreement in place. Seller's attorneys typically serve up the agreement for consideration by buyer.

DISCUSSION BETWEEN COMPETITORS REQUIRES GREAT CARE

  • Where discussions regarding M&A possibilities are taking place between competitors in the same served market segments, great care must be exercised between the parties over what may and may not be discussed pursuant to government regulations (e.g., in the United States, Department of Justice or Federal Trade Commission regulations).
  • Generally, the negotiating parties may not discuss any matters ...

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