Confidentiality agreements during M&As

In the early stages of most M&A deals, either the supervising merchant bankers or the vendor will typically require each potential purchaser to enter into a confidentiality agreement.

In order to assist corporate counsel in giving confidentiality agreements a meaningful, but cost-effective review, Bell Gully has developed a confidentiality agreement checklist tailored specifically for the intending purchaser in an M&A project.

This checklist highlights issues regularly encountered when reviewing confidentiality agreements.

Potential purchasers may be required to enter into a confidentiality agreement before receiving the information memorandum or other introductory material.

In practice, potential purchasers are presented with a confidentiality agreement even before they have decided that the acquisition opportunity is of genuine interest and merits the commitment of real time and money.

In these circumstances, it is tempting to enter into the confidentiality agreement without first having it reviewed by external legal advisers.

Corporate counsel should be aware that confidentiality agreements can contain relatively onerous provisions.
Increasingly, agreements seek to place personal liability on the recipients of confidential information, or deal with matters such as exclusivity in negotiations, terms and conditions of the bid process and/or reliance on information.

If any issues of particular concern arise, the best approach is always to take specific legal advice. For further information please contact Chris Turner or your usual Bell Gully adviser.

Enquiries and information

For more information on any of the cases, articles and features in Commercial Quarterly, please email Rachel Gowing or call on 64 9 916 8825.