NDA (Non-Disclosure Agreement)

What Is an NDA in M&A?

A non-disclosure agreement (NDA) — also known as a confidentiality agreement (CA) (Investopedia) — is typically the first legal document executed in an M&A process. Before a prospective buyer receives any material non-public information about the target company, they must sign an NDA agreeing to keep that information confidential and use it solely for evaluating the potential transaction.

The NDA protects the seller’s competitive position, prevents information leakage to the market, and establishes the legal framework within which sensitive data can be shared.

When NDAs Are Signed

In a structured sell-side process, the NDA sits at the very beginning:

1. Teaser distributed — a brief, anonymous summary of the opportunity is circulated to potential buyers
2. NDA executed — interested parties sign the NDA to gain access to the target’s identity and detailed information
3. CIM distributed — the confidential information memorandum is shared with NDA signatories
4. Process continues — IOIs, due diligence, and LOIs follow under the NDA’s protections (see our sell-side M&A process overview for the full timeline)

Key Provisions

Definition of Confidential Information

The NDA defines what constitutes “confidential information” — typically all written and oral information provided by the seller, its advisors, or the target, including financial data, customer lists, business plans, and the very existence of the transaction process.

Permitted Use

Information may only be used for the purpose of evaluating the potential transaction. Using confidential data to compete with the target, solicit its employees, or approach its customers is prohibited.

Permitted Disclosure

The receiving party may share information with its “representatives” — typically defined as officers, directors, employees, legal and financial advisors, and financing sources — who are bound by the same confidentiality obligations.

Non-Solicitation (Standstill)

Many M&A NDAs include a non-solicitation or standstill provision restricting the buyer from:

• Soliciting the target’s employees for a defined period (typically 12–24 months)
• Making unsolicited offers or public announcements about the transaction
• Acquiring the target’s securities without consent (relevant for public targets)

Term and Survival

NDAs typically remain in force for 1–3 years from execution, regardless of whether a transaction closes. Some provisions — such as those relating to trade secrets — may survive indefinitely.

Return or Destruction of Materials

If the buyer decides not to proceed, or the process concludes without a deal, the NDA typically requires the buyer to return or destroy all confidential materials and certify compliance.

One-Way vs. Mutual NDAs

• One-way (unilateral) — the most common structure in M&A, where only the seller discloses confidential information and the buyer undertakes confidentiality obligations
• Mutual (bilateral) — used in mergers of equals or joint ventures where both parties share sensitive information

Negotiation Points

Despite their routine nature, NDA negotiations can be substantive (Corporate Finance Institute):

• Breadth of “confidential information” — buyers prefer narrow definitions; sellers want broad coverage
• Standstill provisions — buyers may resist restrictions on future acquisition activity
• Non-solicitation scope — how far the employee non-solicitation extends (all employees vs. key personnel)
• Residual knowledge carve-out — whether information retained in the memory of the buyer’s representatives is excluded
• Clean team provisions — in competitor-to-competitor situations, restricting access to the most sensitive data to a defined “clean team” (for a broader checklist, see our M&A due diligence checklist)

For a step-by-step walkthrough of how NDAs fit into the broader transaction, see our M&A process guide.

NDAs in Asia Pacific

Cross-border M&A processes in Asia Pacific require careful attention to NDA enforceability across jurisdictions. The remedies available for breach — particularly injunctive relief — vary significantly between common law jurisdictions (Australia, Hong Kong, Singapore) and civil law systems (Japan, South Korea, Indonesia). Language clauses (governing language for disputes), choice of law, and dispute resolution mechanisms (arbitration vs. litigation) require careful drafting. AI-driven platforms like Amafi help advisors manage NDA workflows across multiple jurisdictions, tracking execution status and ensuring process integrity.