SMB M&A SERIES: Before Disclosing Confidential Information
By: Daniel J. Fetter, Esq.
The SMB M&A series provides insights into buying and selling a small business.
When preparing to sell your business, make sure you require any potential buyer to sign a Non-Disclosure Agreement ("NDA") before disclosing any confidential information. An NDA protects sensitive information like financial records, customer information, intellectual property and other proprietary information (including that you are in discussions to sell your business) from unauthorized disclosure. By requiring potential buyers to sign NDAs, you maintain confidentiality throughout the sale process and preserve the value of your business.
In the event of a breach, the disclosing party may be entitled to monetary damages or injunctive relief to prevent further disclosure.
In addition to the NDA, Sellers should take other precautions to avoid disclosure of Confidential Information, including:
- Limit disclosure only to those individuals who need to know for purposes of pursuing the transaction;
- Wait to disclose your most sensitive information (e.g., customer list) until you have more assurance that the deal will close;
- Use data rooms to share information rather than sending documentation by mail/email. This also allows users to track who viewed the information.
The Scolaro Law Firm handles small business M&A transactions throughout New York State, Vermont, Pennsylvania and Florida. If you are interested in buying/selling a business, please contact Daniel Fetter or the attorney at our firm with whom you work.
This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.

