Non-disclosure agreement
The agreement a prospective buyer signs before receiving confidential information about a business for sale.
Also called: NDA · Confidentiality agreement · CA
The NDA is the gate. It defines what counts as confidential, what the recipient may do with it, who else they may show it to, how long the obligation lasts, and what happens on breach. In an M&A context it usually also carries non-solicitation covenants — the buyer agrees not to hire your staff or approach your customers if the deal does not proceed.
Those non-solicitation clauses often matter more than the confidentiality itself. The realistic risk in a failed process is rarely that a buyer publishes your financials; it is that a competitor learns your customer list and your key people and acts on it. Sellers should read those provisions specifically, and should think carefully before sending anything sensitive to a direct competitor even under an NDA.
Enforcement is the honest limitation. An NDA gives you a claim, not a guarantee, and pursuing one is slow and expensive. The practical protection is staging what you disclose: general information early, identifying detail later, the most sensitive material only when the buyer is demonstrably real and close.
Where sellers get caught
- Sending everything at once because an NDA is signed.
- Accepting a buyer's standard form without checking who counts as a permitted recipient — affiliates, lenders, and advisers can be a wide group.
- No non-solicitation covenant, which is the clause you will actually want if talks fail.
Common questions
Is an NDA enough to protect confidentiality?
It is necessary but not sufficient. Staging disclosure — and being deliberate about what a competitor ever sees — does more practical work than the document alone.
How long should an NDA last?
Terms of two to five years are common, with longer periods sometimes applied to trade secrets. What matters as much is the length of the non-solicit.
Related terms
Confidential information memorandum
The detailed document describing a business for sale, sent to qualified buyers after they sign an NDA.
Data room
The controlled repository where diligence documents are shared with a buyer, with permissions and an access log.
Exclusivity
A binding commitment in the LOI that the seller will not negotiate with other buyers for a defined period.
Business broker
An intermediary who markets a business for sale to a pool of prospective buyers, usually for a success fee.
Guides that use this term
Where non-disclosure agreement comes up in a real sale, and what it changes.
Last reviewed 2026-08-25. General information for business owners, not legal, tax, or financial advice — terms, thresholds, and tax treatment vary by jurisdiction and by deal.