In the context of a merger or acquisition, a confidentiality agreement, also known as an “NDA”, is often one of the first agreements signed by the parties to a transaction. The main purpose of an NDA is to facilitate further interaction between the parties by allowing them to exchange information while providing some protection against unauthorized disclosures. It is advisable, especially for a seller, to take an NDA as soon as possible and before communicating sensitive information to a potential buyer. When developing an NDA, the parties may include the language of the NDA in a Memorandum of Understanding; However, it is often advisable to create a separate NDA. By entering into a separate NDA, the parties can more effectively negotiate the terms of a Memorandum of Understanding if each party has access to additional information. The sooner the parties finalize an NDA, the sooner the due diligence process can begin and the sooner the parties can determine whether the transaction is viable. This saves the parties time and money by negotiating the terms of a sales contract for a transaction that may eventually disintegrate during the due diligence period. When entering into an NDA pursuant to a proposed transaction, it is advisable to state in the document that the NDA does not guarantee or require the parties to complete a transaction. Confidentiality period.

The NDA has or must have a provision setting out the period for which the parties are required to keep this information confidential. Here too, the context determines the “correct” answer for you. I think the information should be confidential for the duration of the NDA and a few years later. A new trend is a rolling period of privacy. For example, two years after the date of disclosure. If your company tracks data related to the disclosure and receipt of all confidential information that enters and exits your business, you may want to reassess your business priorities or human resources. Another trend has been “X” from the date of entry into force of the NDA, with “X” tending to be two or three years. If we consider a typical business relationship, the NDA parties will likely not exchange strictly confidential information at first, but over time, as the relationship develops, the type of confidential information may be more sensitive. In this scenario, the term of protection decreases as the sensitivity and value of confidential disclosures increases. This may be acceptable to cover a very short sales cycle, but it also seems to be a deterrent to the exchange of useful information. As I said at the beginning, context is everything in the verification of an NDA. The “correct” answer is very fact-specific and is not necessarily the same for both parties, and it is certainly not the same for each NDA.

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