Buying or selling a business online requires a large amount of trust. As a seller, you may be concerned that sensitive information about your business could get into the wrong hands, while for buyers, proper due diligence often requires you to dig deep into a businesses' financials.
This is where the NDA, or Non-Disclosure Agreement, comes in. The NDA is a legally enforceable contract that can help ensure any confidential information that is shared between Sellers and Buyers is kept confidential. These agreements specifically outline what information should be kept private during and post-sale.
The NDA should specify what purposes the information is meant to be used for and that the information will not be shared with others or used for their own commercial advantage.
When do I need an NDA?
Often times, sellers of larger businesses must disclose confidential or proprietary information with buyers at the point when the buyer begins their due diligence. It's at this point that the seller should begin the process of obtaining an NDA, which will be signed by the buyer or any other parties who could be exposed to confidential information about the business.
If you want to feel a stronger sense of security when sharing any of the following information with a buyer, we recommend having the buyer sign an NDA.
- Private information about your business model
- Proprietary information about any tool your business uses to operate
- Information about your customers
Why should I sign an NDA?
If you're serious about buying any larger scale business online, it's very likely that you'll be asked by the seller to sign a non-disclosure agreement. Doing so will go a great way in establishing trust with the seller and will allow you to vet the information that you require to make a final decision about buying.