M&A Confidentiality Advice for Buyers - dummies

M&A Confidentiality Advice for Buyers

By Bill Snow

A confidentiality agreement (CA) for an M&A deal is a serious and real legal document, and a Buyer who signs a CA should take every precaution to speak only with those who need to know about the business and are covered by the CA.

Inform employees and advisors of the CA

Generally, a confidentiality agreement allows the signers to speak with employees and advisors about the transaction. The CA specifically delineates these people by job title or function (not by name).

The Buyer must inform any employee or advisor that that person is bound by the terms of the confidentiality agreement.

Don’t discuss the deal in public

It’s amazing what you can overhear in public. People talk about lawsuits, tax cases, criminal cases, and even M&A transactions. More often than not, these conversations use the actual names of the individuals or the companies involved!

Of course, yapping about such sensitive information is a no-no. You never know who’s sitting at the table next to you. That professional intently working the crossword puzzle (in ink, thank you) while awaiting his soup may be getting an earful of private, confidential, and sensitive conversation. It happens.

Instead of using specific names, M&A deal-makers should take a wiseguy approach to talking about sensitive material. Here’s an example of this cloak-and-dagger approach:

Deal-maker 1: “Did you talk to that guy about that thing? You know, our friend in Columbus, did you take care of that thing with that guy?”

Deal-maker 2: “Oh, yeah, don’t worry, he won’t be a problem anymore. I took care of it; we had a real nice chat the other day.”

See how that works? Liberal use of “that guy,” “our friend,” and “that thing” goes a long way to help keep things under wraps. If you need to clarify, mention the city (“our friend in Seattle”) or mention the type of business (“that guy in the apparel distribution business in Lexington”).