Why NDAs Are Essential When Selling Your Business

When preparing to sell a business, discussions often focus on valuation, negotiation, and due diligence. But before any of that starts, there's one essential safeguard: a well-drafted Non-Disclosure Agreement (NDA).

NDAs protect your confidential business information when engaging with potential buyers — ensuring your sensitive data stays private, even if the deal doesn’t proceed.

What Is an NDA and Why Does It Matter?

An NDA (also called a confidentiality agreement) legally restricts the other party from using or sharing any information disclosed during sale discussions.

This includes:

• Financial statements.

• Client and supplier lists.

• Strategic plans and pricing models.

• Intellectual property.

• Trade secrets.

• Staff and contractor information

Without an NDA, you risk competitors or opportunistic parties using this information to their advantage if negotiations fall through.

What Should an NDA Include?

An effective NDA tailored to a business sale should:

• Define “confidential information” broadly (including verbal, written, and electronic disclosures).

• Restrict use of the information strictly for evaluating the sale.

• Limit who within the buyer’s organisation can access the data.

• Require return or destruction of documents if the sale doesn’t proceed.

• State how long obligations last post-discussion.

• Outline remedies and legal consequences for breaches.

NDAs may be one-way (just the seller discloses information) or mutual (both parties share confidential data).

Avoid Generic Templates

A boilerplate NDA won’t cover the nuances of your business or the specifics of a sale transaction. An overly narrow or broad agreement can either leave you unprotected or discourage serious buyers.

LLGOLD Tip: Never disclose sensitive business details without an NDA in place. Engage legal counsel early to ensure the NDA is enforceable, practical, and aligned with your commercial objectives.