Confidentiality agreement or NDA – restricted use of confidential information

Andy Lau has substantial experience representing pe/vc funds, investment banks and startup and growth companies in pe/vc investments, M&A, IPO and capital markets transactions. For a preliminary consultation, please email him at andy@askventure.com.

This is another post on NDA. I wrote a post on return or destruction of confidential information not long ago. This post is on restricted use of confidential information.

I have only a few points to make.

1. Normally, Seller will be disclosing confidential information not just to Buyer, but also to Buyer’s Representatives. Representatives may include directors, officers, employees, agents, consultants, advisors, legal counsel, accountants, financial advisors, etc. If I’m acting for the Seller, I would want to limit the scope of Representatives as much as possible.

2. If I’m acting for the Seller, I will negotiate for the following terms:

(a) Buyer can disclose to Buyer’s Representatives Confidential Information only for the purpose of evaluating the possible Transaction (and to the extent practicable, only such part that is so required and without revealing the possible Transaction)

(b) Buyer’s Representatives shall be informed by the Buyer of the confidential nature of the Confidential Information

(c) Buyer shall cause Buyer’s Representatives to keep the Confidential Information confidential

(d) Buyer shall be responsible for breaches of confidentiality by Buyer’s Representatives

(e) Buyer shall inform Seller promptly of any breaches of confidentiality by Buyer’s Representatives that have come to its knowledge

The list is not exhaustive and there could be more terms to protect the Seller. If you have recently received an NDA from a potential investor and needs to hire a lawyer to review it, make sure the above points are covered (in case you are the disclosing party) or not covered (in case you are the receiving party). It’s a matter of negotiation. A good lawyer or law firm can help.

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1. Confidentiality agreement or NDA – return or destruction of confidential information
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