What is an NDA when selling a business and who should sign it in British Columbia?
This answer covers the law of British Columbia.
An NDA, or non-disclosure agreement, is a written promise by a possible buyer to keep your business information private and use it only to decide whether to buy. Sign it before you hand over financial statements, customer lists or contracts, not after.
Who signs depends on the deal, and if the buyer is a company, the agreement should name the correct legal entity. A BC corporate search produces a company summary and Notice of Articles showing the current directors. Whether advisors, accountants and lenders who will see your information need to sign their own copies or be bound another way depends on the deal, so it is worth confirming with a lawyer.
What an NDA should cover, such as what counts as confidential and how it may be used, depends on the deal and is worth settling with a lawyer before you share anything. Release information in stages, keeping the most sensitive details until the buyer is serious. Whether a court would enforce a particular clause depends on its wording and the facts, so have a lawyer review the agreement before you release anything.
Key takeaways
- Have the NDA signed before you share financial statements, customer lists or contracts.
- Make sure the agreement names the buyer's correct legal entity; a BC corporate search produces a company summary and Notice of Articles showing the current directors.
- Who else will see your information, such as advisors, accountants and lenders, is worth settling in the NDA, and a lawyer can confirm how to bind them.
- Cover what is confidential, permitted use, who may see it, how long it lasts and what happens to documents if the deal ends.