Why Confidentiality Matters in M&A

Allow us to let you in on a little secret: Confidentiality is an essential part of the M&A process. Why? Especially for middle-market companies, the hunt for a potential buyer can take time and lots of vetting. And vetting requires letting prospective buyers — and all the people involved in a transaction, from accountants to lawyers and beyond — under the hood of your business. Ensuring confidentiality through non-disclosure agreements can not only help a transaction go through but also serve as protection in the event a deal isn’t completed. At Symmetrical, we’ve helped countless business owners navigate the sale of their business while protecting their critical confidential information. Here are four factors to keep in mind when it comes to confidentiality and your transaction.

Design an NDA for Your Specific Needs

Some companies in an M&A process will propose a boilerplate NDA. This is rarely a good idea. Each business is unique, with particular confidentiality needs. A boilerplate NDA may not cover the specific elements of your business that need to be protected. A dedicated NDA, however, can avoid any confusion or future disagreements over what was subject to the agreement.

Protect Key Information

As a business owner, you would never usually share your trade secrets or client lists with a competitor. However, until a deal is finalized, your business still has a responsibility to maintain its competitive advantage. The first interested buyer may not be the one who ultimately closes the deal. An NDA can ensure that your company’s valuable data and strategy remain protected, whether the deal goes through or not.

Ensure Future Flexibility

In some cases, a business owner may decide to sell only a portion of their business. In this scenario, an NDA is your friend. It enables you to open up your books and strategies enough to give a buyer confidence but also protects your proprietary information and sets you up for further success in the future after the transaction is completed.

Remember Your Own House

A transaction is very delicate, especially at the beginning of the process, when very few people inside the business know that an acquisition could be forthcoming. If news of the discussions were to leak, it could both hurt employee morale and jeopardize the relationship with the buyer. Consider limiting those involved with the deal to senior leadership at the beginning of the process and include them in an NDA as well, ensuring that no leaks come from inside your own house.

Mergers and acquisitions are complicated enough transactions as they are. The prospect of leaks or losing key company data in the event of a failed transaction is why confidentiality and NDAs are so important. Our team at Symmetrical has experience working with sellers to ensure that their assets are protected and that a sale ends up successful. Get in touch with us today to learn more about how our team can assist with devising a strategy for confidentiality.