It is important for a business owner to use a solid confidentiality agreement when it comes time to sell their business. A confidentiality agreement will help maintain secrecy during negotiations. In this article we will explore what you should expect out of your confidentiality agreement.
What Is A Confidentiality Agreement
A confidentiality agreement is a legal agreement that binds one or more parties to non-disclosure of confidential or proprietary information. It forbids buyers, sellers, and related parties from disclosing information regarding the transaction. A confidentiality agreement should be in place before discussing the business in any way.
What Does A Confidentiality Agreement Seek To Accomplish
One small aspect of the use of a confidentiality agreement is to keep the fact that a business is for sale private. The purpose of a confidentiality agreement is to protect the financial and intellectual property of a company. They help to ensure that a prospective buyer doesn’t use any proprietary data, knowledge or trade secrets to benefit themselves or other parties.
Variables To Keep In Mind When Creating A Confidentiality Agreement
It is important to keep several variables in mind when creating a confidentiality agreement. Some of these variables include:
- What information will you disclose and what information will you exclude
- The term of the confidentiality agreement
- The remedy for breach
- The manner in which you will use and handle confidential information.
Things To Include In A Confidentiality Agreement
Include the specifics of how to maintain confidentiality in the agreement. Parties should agree to hold conversations in private. Safeguarding documents is another area that should receive attention. Digital files should be password protected. Keep all paperwork in a safe location and locked away when not in use.
Many sellers overlook the confidentiality agreement stage of the selling process. A confidentiality agreement can help protect your business’s key information. We strongly recommend that sellers always depend on confidentiality agreements to establish information disclosure perimeters.