Deals

NDAs and confidentiality agreements: what they cover and how they are used.

In American business, a nondisclosure agreement is often the first document anyone signs. A founder sends one before a partnership call. A seller's banker sends one to every prospective buyer. A software vendor asks for one before showing a roadmap. The terms NDA and confidentiality agreement are generally used interchangeably, and what matters is the content.

This article walks through the forms these agreements take, the terms that tend to get negotiated, and how a data room can require acceptance before anyone sees a document. It is general information, not legal advice. Have an attorney draft or review any agreement you rely on.

Mutual or one-way

A one-way, or unilateral, agreement protects information flowing in one direction, such as from a company being sold to a prospective buyer. A mutual agreement protects information flowing both ways, which suits partnerships, joint ventures and commercial discussions where each side will reveal something.

The choice is not only about fairness. A mutual agreement binds the party that drafted it too, so a company that expects to receive little may still prefer a one-way form. In M&A, the buyer usually signs a one-way agreement prepared by the seller's counsel or banker, sometimes called a confidentiality agreement and sometimes simply the NDA.

Terms that come up most often

What counts as confidential

Agreements define confidential information, often broadly, and then carve out exceptions: information that is already public, that the recipient already had, that the recipient develops independently, or that comes from a third party with no duty of confidence. Some agreements require information to be marked confidential; others protect everything disclosed.

Permitted use and who may see it

Most agreements limit use to a stated purpose, such as evaluating a possible transaction, and allow disclosure to representatives who need to know, such as employees, attorneys, accountants and financing sources. Whether the recipient is responsible for those representatives' conduct is often negotiated.

Term and return or destruction

Agreements set how long the obligations last, commonly a fixed number of years, sometimes longer for trade secrets. They usually require the recipient to return or destroy information on request, with exceptions for copies kept in automatic backups or required by law or internal policy.

Deal-specific terms

Agreements in acquisitions often add terms that have little to do with confidentiality as such: a promise not to solicit the target's employees for a period, a standstill restricting share purchases where the target is a public company, a statement that no deal exists until a definitive agreement is signed, and a residuals clause letting the recipient use general knowledge retained in memory. Each of these is commonly negotiated.

Employees and whistleblower notice

Agreements with employees and contractors are different again. Under the federal Defend Trade Secrets Act, an employer that wants certain remedies against an employee must give notice of the Act's whistleblower immunity in agreements governing confidential information. An attorney can tell you how that affects your forms.

Agreements are only part of protection

An NDA sets expectations and gives you a basis for remedies if they are broken. It does not stop a document from being forwarded, printed or left on a laptop in an airport. The practical side of protecting information is controlling what you share, with whom, and in what form.

Share in stages. Early-round bidders rarely need customer names or employee details.
Give each party access to the folders that match the stage they have reached.
Keep a record of what each party saw, so the scope of disclosure is clear later.
Recover access when discussions end, in line with the agreement's return or destruction terms.

NDA acceptance inside a data room

ShareAndGo can require each recipient to accept an NDA before they enter a room, and keeps a record of who accepted and when. That is useful for click-through confidentiality terms in a broad process, or as a reminder of obligations already signed separately. Whether a click-through acceptance is appropriate for your situation is a question for your attorney. Some parties will insist on signing a negotiated agreement first, which you can do through SignAndGo using the same MyAndGo login.

Once inside, each recipient has confirmed their email with a six-digit code, so access belongs to a person. Groups decide which folders each party can see. View-only PDFs, Word, Excel and PowerPoint files are rendered on our side with the viewer's name, email and date on each page, and the original is not sent to their browser. Invitations can end on a date and be revoked at any time.

The audit log records every view, download and change, chained so that alterations are detectable, and exports as CSV. At the end of a process, that record shows what each party was given access to and what they opened.

Common questions

Is there a difference between an NDA and a confidentiality agreement?

In US practice the names are generally used interchangeably. The terms inside the document are what matter.

How long should obligations last?

It varies with the information and the deal. Your attorney can advise on a term that fits what you are disclosing.

Can I see who accepted the NDA in my room?

Yes. The room records who accepted and when.