Managing Disclosure Risk In M&A Transactions

The disclosure of confidential information during the negotiation and due diligence phases of an M&A transaction can expose the disclosing party to various risks. For example, competitors can initiate M&A discussions as a strategic tactic to gain access to sensitive proprietary information and to exploit that information at the expense of the disclosing party. In a hyper-competitive and technology-focused business environment, the protection of confidential information (and other intellectual property) should be a priority for all businesses – particularly during a merger or acquisition.

An example of the inherent risks in M&A disclosure is found in the ongoing US litigation between Stingray Digital Group (Stingray) and Music Choice. On June 6, 2016, Stingray, a publicly-traded Canadian media and entertainment company, was accused in the courts of the Eastern District of Texas of infringing on patents owned by Music Choice, a US provider of digital music. Stingray