Keeping Secrets: A Refresher On Confidentiality Agreements

People often engage in reflexive behaviour without thinking about the function underlying such behaviour. Likewise, in recurrent M&A transactions, clients sometimes lose sight of why they engage in certain formalities.

One such formality concerns pre-acquisition agreements; more specifically, confidentiality agreements (CAs) – including their (i) purpose and (ii) scope.

Purpose of CAs

In preliminary M&A negotiations, the exchange of confidential information is essential to the terms of the transaction. As parties progress beyond preliminary stages to due diligence, increased disclosure is met with intensified risk of the compromise of proprietary information. Executing CAs allows the parties to securely progress beyond preliminary negotiations in order to effect the deal.