As a part of the process of selling your business you are going to be talking to prospective buyers, hopefully.
There is a dance to be done about how much information you are willing to give and at what stage in the process. You want to encourage legitimate buyers but not give “tire kickers” confidential information.
The non-disclosure agreement (NDA) is a step along this path. When you feel that you have a buyer who is genuinely interested and you are getting ready to give them all of your confidential financial information, this is the time that you need a signed non-disclosure agreement. The purpose of the agreement is that if the person does not buy your business and in fact disclose the financial information to someone else that you can sue them for damages. This will not be a satisfactory resolution. However, the signing of the agreement should help the buyer to understand that there are consequences to disclosure.
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