to maintain a competitive advantage, businesses must keep working projects, innovative ideas, or exciting new products secret lest they fall into the hands of a competitor. a non-disclosure agreement, or nda, is a legal document that keeps the lid on such sensitive information. some ndas will bind a person to secrecy for an indefinite period of time so that at no point in time can the signer divulge the confidential information contained in the agreement. for example, a start-up company seeking to raise money from venture capitalists or other investors may fear that their good idea will be stolen in lieu of receiving an investment.

a non-disclosure agreement (nda) is a document that is exchanged between a prospective buyer and a seller in the initial stages of an m&a transaction. the nda is also referred to as a “confidentiality agreement.” an nda is generally drafted and executed by the prospective buyer, but sometimes it is drafted by the seller. a well-written nda anticipates a possible m&a transaction and includes a covenant requiring the confidential information to be “used solely for the purpose of evaluation of a possible transaction”, or words to that effect.