Written NDA in Acquisition Discussions

November 30, 2013

in Acquisition, Legal, Negotiation

Oftentimes, acquisition discussions involving startups become an analysis of make versus buy for a BigCo. The BigCo is both vetting the startup for a potential acquisition as well as vetting it as a potential competitor if they choose to compete instead of acquire.

For this reason, BigCos are often reluctant to sign healthy NDAs at the moment when startups need them the most:  in a potential acquisition discussion.

Eager startups hoping to please the BigCo can be tempted to ignore the need for a written NDA. They may simply decide to proceed with the sensitive discussions on good faith or verbal assurances, hoping to persuade the BigCo and not miss out on the opportunity.

I suspect that more often than not, acquisition discussions result in competition rather than acquisition. My opinion is that any seriously interested acquiring party will be willing to sign a healthy NDA. If your insistence on a written NDA kills the talks, the talks probably would not have resulted in anything beneficial anyway.

What are your thoughts on the need for a written NDA in acquisition discussions?

 

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