One of the most important documents you will need to create as part of your M&A exit process is the non-disclosure agreement (NDA) that you will need to have potential buyers sign.
Why does this matter?
First, and most importantly, before you release any confidential information about your company, you will need to have every buyer sign your NDA. If you release any data about your company without having a legally binding NDA, you risk a serious breach of confidentiality about your business that could end up harming it in the long run.
If you have not hired an investment banking firm with experience, like Generational Equity, you will need to create your own NDA. This should never be done without the input of an experienced M&A attorney. It is far too risky to release information to any buyers if you don’t have, at a minimum, an iron-clad NDA signed and in place.
Keep in mind that you will also be creating a limited auction environment, so you will most likely have multiple NDAs out at once, and you will need to keep track of each one to ensure that the information you are releasing is trackable and traceable.
One of the most important components of any NDA is the stipulation that the buyer does not breach the confidentiality of the seller’s business. This can include several issues including:
As you can see, the definition of what is included in an NDA can and should be very specific to your business. Clearly those items that make your business unique, the intangible assets that make you successful, are very distinct to you and your company and need to be protected from those buyers who may not really be interested in your company, but are more interested in “stealing” trade secrets from you under the guise of being a real buyer.
So to avoid all the risks this can carry for you, we highly recommend that you hire an experienced investment banking advisor to guide you through the entire exit process, but especially the NDA phase. Don’t just take my word for it – have a listen to what a few of our clients have to say about the need for diligence in providing any data to anyone:
As these business owners indicate, during the due diligence process, where your NDA really becomes important, it is critical to have a professional by your side to help you navigate the key steps involved in closing an optimal deal with any buyer.
Since most business owners will only sell one company in their entire career, it is not wise to leave your financial legacy up to rookies, those with less experience than you would like, when negotiating with professional buyers.
To learn more about how critical an NDA can be, and to gain a greater understanding of the entire exit process, I would recommend that you attend a Generational Growth and Exit Planning Conference. Even if you have gone before, getting a refresher on the key elements of successful exit planning can be critical. To find out how you can attend, please call us at 972-232-1121 or visit our website, provide us with your contact information, and we will be in touch.
But the bottom line is this: Do not approach any buyers without having an NDA signed and in place that can protect you from loss. Using anything less than that can have serious consequences for you and your business.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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