Michael Roub Explains NDAs for Mergers and Acquisitions

(Newswire.net — January 10, 2018) Agoura Hills, CA –Business transactions require a level of information security, whether it is data about financial records or documentation on business processes. When it comes to large-scale transactions such as mergers and acquisitions, it is important for both parties to have a Non-Disclosure Agreement or NDA, a contract that contains sensitive data and information that, when leaked, may be detrimental to either parties. This contract binds the two parties and often comes in two forms: the one-way agreement or mutual agreement. The former indicates that only one party will share information, while the mutual agreement indicates that both parties will share sensitive and confidential information between themselves.

Michael Roub, who is an experienced investment banker and skilled leader in both sales and operations of health and medical businesses, explained that in terms of a merger or acquisition, an NDA has a two-pronged purpose, the first being to maintain confidential information, and secondly, to ensure that such confidential information is used solely to evaluate and negotiate the merger and acquisition transaction. If such confidential information is used for other purposes aside from those stated above, the disclosing party will have every right to sue the other party for damages and breach of confidentiality agreements. To learn more about him, visit his official site.

As with other contracts, NDAs also have an expiry date. While some believe that NDAs should last indefinitely to protect the privacy and conserve the confidentiality of sensitive information, this is a costly process that some think is not necessary, especially when information becomes obsolete. According to Roub, information changes rapidly, and what may be deemed relevant one or two years ago may no longer be as important today. He stresses that NDAs that are deemed to stay in effect indefinitely are terribly costly, as it will require parties to sign multiple NDAs repetitively over the course of time, and recommends that NDAs should have a time limit of two to five years at most.

Roub, who spent years leading capital sourcing and generation, business restructuring, and mergers and acquisitions, believes that NDAs should have an ample section on exclusions, which outline information that need not be included in the NDA. Such exclusions include information or data that is already known to the public, already known to the recipient of the contract, or has been independently developed by the receiving party that will not reference or be used by the disclosing party. Additionally, an exclusion may also be certain information obtained by the recipient of the NDA through a third party who has no confidentiality obligations to the disclosing party.

Lastly, Roub explains that an NDA must contain a clause that outlines the responsibilities of the recipient as to how they will return or destroy the information. While this may first seem as a burden, it will only occur when the merger and acquisition talks do fall through, and is for the sole purpose of protecting both parties.