Confidentiality Agreement

When a merger or acquisition occurs between two companies, it is common to have a confidentiality agreement in place to protect sensitive and confidential information during negotiations and throughout the merger process. This agreement is generally referred to as a “non-disclosure agreement.” The merger confidentiality agreement is a legal contract between the parties involved in the transaction. It establishes the rules and obligations relating to the protection of confidential information exchanged during preliminary discussions and negotiations. The main purpose of this agreement is to prevent unauthorized disclosure of sensitive information that could harm the companies involved or the transaction itself. Here are some key elements that are typically included in a merger confidentiality agreement:

1. Definition of Confidential Information: The agreement specifies what information is considered confidential and must be protected. This may include financial data, strategic plans, employee or client information, patents, trade secrets, etc.
2. Obligations of the parties: The parties undertake to maintain the confidentiality of the information exchanged and not to disclose it to unauthorized third parties. They may also agree to take additional steps to protect this information, such as using appropriate security measures.
3. Confidentiality period: The agreement specifies the duration for which the parties are required to maintain the confidentiality of the information. This can be a set period of time or until the transaction closes.
4. Exceptions to Confidentiality: The agreement may list situations in which confidential information may be disclosed without breaching the agreement, for example, if disclosure is required by law.
5. Remedies for Breach: The agreement generally stipulates the remedies available for a breach of confidentiality, such as damages or injunctive relief.

It is important to note that each confidentiality agreement may vary depending on the specific circumstances of the transaction and the preferences of the parties involved. It is recommended to consult with an experienced mergers and acquisitions attorney to draft and review the agreement to ensure it meets the specific needs of all parties involved.