Confidentiality Agreements Matter – Three Recent Cases Impacting Private Equity Transactions

SUMMARY OF THE CASES

A confidentiality agreement ("CA") is typically the first negotiated document in a purchase transaction. These agreements are often negotiated by junior members of the transaction team prior to one (or both) parties engaging outside legal counsel. CAs set the stage for a transaction and, as recent cases have shown, can define the playing field in the event that a deal falls apart. Three cases decided in the last 70 days highlight the significant effect a CA can have after the parties have decided not to pursue a transaction.

TAKE-AWAYS

1. CAs will likely be more heavily negotiated in light of recent decisions.

2. Beware of unintended consequences when entering into CAs (e.g., certain language in a CA could have the same effect as a standstill agreement).