Guide to agreeing NDAs

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Johnny Cashflow

Ask the team what has been acceptable / non-acceptable in the past.

Are there deal breakers?

Pay attention to: - length of term - scope of non-solicit - venue - representations - injunctive relief - tail provisions and other restrictive covenants

Authored by: Certified Investment Banking Professional - 3rd+ Year AssociateCertified Investment Banking Pro

Ask your deal Partners what is make or break for the firm, i.e. the things that you absolutely cannot accept.

Retention of information is a big one

Authored by: Certified Private Equity Professional - Vice PresidentCertified Private Equity Pro

Layne Staley

Most Helpful

I love NDAs. They're an incredibly effective tool in the early stages of a deal, but not for the reasons you think.

For a banker, the NDA negotiation process is for one purpose: finding out how tough someone will be to work with through the deal.

I know, I know ... the protections in NDAs are important, don't want employees poached or information leaked, yadda yadda yadda. Everyone has their hot-button issue that they absolutely won't bend on. But of however many hundreds of deals the people in my previous firms have worked on, none of us have ever seen an NDA litigated. Not once.

So the point, then, is to show me what you're like. If you sign an NDA and send it back immediately to get on with the stuff that matters, I know you're responsive and interested. If you take three days and come back with a marked-up NDA that makes sentence structure suggestions, then you're going to be a giant pain in the ass with the term sheet or the PSA or any other document to be negotiated, and you've just shown me that this whole interaction is going to be a grind. Bottom of my list you go.

To get back to the actual question that was asked: m8 had it right, your job on the buy-side is to channel the partners' attitudes, so ask them for their primary concerns and then act as if you were an extra pair of hands for them. But be conscious of the message it sends if you are a hard-ass on the NDA.

"Son, life is hard. But it's harder if you're stupid." - my dad

Bullet-Tooth Tony

Layne Staley:
I love NDAs. They're an incredibly effective tool in the early stages of a deal, but not for the reasons you think.
For a banker, the NDA negotiation process is for one purpose: finding out how tough someone will be to work with through the deal.

I know, I know ... the protections in NDAs are important, don't want employees poached or information leaked, yadda yadda yadda. Everyone has their hot-button issue that they absolutely won't bend on. But of however many hundreds of deals the people in my previous firms have worked on, none of us have ever seen an NDA litigated. Not once.

So the point, then, is to show me what you're like. If you sign an NDA and send it back immediately to get on with the stuff that matters, I know you're responsive and interested. If you take three days and come back with a marked-up NDA that makes sentence structure suggestions, then you're going to be a giant pain in the ass with the term sheet or the PSA or any other document to be negotiated, and you've just shown me that this whole interaction is going to be a grind. Bottom of my list you go.

To get back to the actual question that was asked: m8 had it right, your job on the buy-side is to channel the partners' attitudes, so ask them for their primary concerns and then act as if you were an extra pair of hands for them. But be conscious of the message it sends if you are a hard-ass on the NDA.

Can confirm. Many of the worst mark-ups these days come from incloud or other outsourced NDA negotiators.

Authored by: Certified Investment Banking Professional - Executive DirectorCertified Investment Banking Pro

b43b6b7b82b87

Decent size PE firm doesn’t have a lawyer?

Authored by: Certified Investment Banking Professional - 1st Year AssociateCertified Investment Banking Pro

miscer

b43b6b7b82b87:
Decent size PE firm doesn’t have a lawyer?

Associates help negotiate NDAs (with outside counsel) at many funds incl my old firm which is large cap

Authored by: Certified Private Equity Professional - Senior Vice PresidentCertified Private Equity Pro

b43b6b7b82b87

To date I always received NDAs from associates who directly cited mark-ups from their counsel

Authored by: Certified Investment Banking Professional - 1st Year AssociateCertified Investment Banking Pro

2 replies

Alexkon

Are there any resources you recommend to learn up on NDAs as an associate with a non-legal background?

Authored by: Certified Private Equity Professional - 1st Year AssociateCertified Private Equity Pro

consluttant

Having worked with PE firms as a consultant, I just want to throw out there that NDAs seem to be a pretty common pain point - that is, everyone hates their process and it's a huge thorn in the side of the front office

So I don't have an answer for you as I've never worked PE, but am chiming in to say there may not really be a great answer

Authored by: Certified Consulting Professional - Senior ConsultantCertified Consulting Pro

StrategyJunkie

Ontra/InCloud/whatever they are called are the absolute worst. They will go through 5 turns of NDA just for kicks.

Authored by: Certified Private Equity Professional - Vice PresidentCertified Private Equity Pro

jl12

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