Yes, a business buyer should generally sign a non-disclosure agreement (NDA) before receiving sensitive commercial, financial or operational information. An NDA establishes confidentiality obligations and helps protect information shared during the sale process. Although not legally required for every transaction, it is a common precaution when discussing a potential business acquisition.
An NDA can help protect three important areas:
- Financial information: Detailed accounts, profitability figures, forecasts and other commercially sensitive financial records.
- Commercial relationships: Customer lists, supplier pricing, contracts, business strategies and confidential operational information.
- Use and disclosure: Restrictions on how the buyer can use the information, who they may share it with and what happens if discussions end.
For example, if a prospective buyer is also a competitor, an NDA may help restrict the use of confidential customer information obtained during acquisition discussions.
However, an NDA does not eliminate every risk. Sellers should still verify buyers, control access to sensitive documents and seek legal advice on appropriate confidentiality protections.
Read more: Why You'll Need to Sign an NDA Before Buying a Business
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