In this session, our panelists discussed confidentiality agreement considerations, terms often negotiated in confidentiality agreements, as well as the pros and cons of utilizing letters of intent and matters covered therein.
- Focus on the definition of “confidential information” and exclusions in confidentiality agreements. Buyers want a narrow definition and broad exclusions, and sellers want a broad definition and limited exclusions.
- If the disclosing party is a public company, the confidentiality agreement should contain appropriate provisions to ensure compliance with securities laws, and parties should consider whether to include a standstill arrangement.
- Confidentiality agreements may not always prevent the disclosure of confidential information. Disclosing parties should have a contingency plan for dealing with leaks, and take appropriate measures to protect extremely sensitive information.
- Confidentiality agreements should not usurp a seller’s ability to control the sale process.
- Be mindful of the overall deal timeline when negotiating a letter of intent.
- Be careful not to create a binding contract when entering into a letter of intent—clarify which provisions, if any, are binding and which are not binding.
- Even though a letter of intent is not binding, prepare for disputes if parties deviate from the terms set forth therein.
For more information on this topic, please contact our participants.