Are non-disclosure agreements (“NDAs”) important and will everybody sign them?
Our feeling is “you don’t get what you don’t ask for”. The intention of a NDA is to protect the entrepreneur and organization from the improper use and distribution of sensitive and confidential information. Disclosure of confidential, proprietary, and often time-sensitive information can be detrimental to the successful execution of the business and/or transaction. While the enforcement of NDAs is often difficult and costly (i.e. litigation), we recommend their use in order to best protect the asset/business opportunity. In our experience, NDAs are signed roughly only about 50% of the time. Typically, strategic purchasers and traditional funding institutions will agree to sign NDAs while few venture capitalists will.
