Should I sign a non-disclosure agreement before seeing a Manitoba business's financials?
This answer covers the law of Manitoba.
In most cases, yes: it is normal for a seller or broker to ask you to sign a non-disclosure agreement before sharing financial information, and signing one is usually the price of getting a serious look at the numbers. The agreement is a contract, though, so you should read it before you sign, not just after.
An NDA generally says what counts as confidential information, how you may use it, who you may share it with (such as your accountant, lender or lawyer), and how long your duty lasts. Terms worth watching include a very broad definition of confidential information, no end date, limits on contacting the seller's staff, customers or suppliers, and any penalty for breaching it. Some NDAs also add other promises, such as not hiring employees, so check what else is in there.
Signing carries risk because you take on obligations whether or not the purchase goes ahead. An NDA also does not replace your own checks. Any person may request a Personal Property Registry search by a debtor's name, and it should use the seller's exact legal name. The Manitoba Companies Office publishes instructions for corporate searches and file summaries, which are used to confirm a corporation's existence, directors and filings. A lawyer can review the wording before you sign.
Key takeaways
- It is normal for a seller or broker to require an NDA before sharing financial information, but it is still a binding contract you should read first.
- Watch for a very broad definition of confidential information, no end date, limits on who you may share it with, and restrictions on contacting staff, customers or suppliers.
- Signing creates obligations whether or not the purchase goes ahead, so be sure you can live with the terms.
- An NDA does not replace your own checks, such as a Personal Property Registry search under the seller's exact legal name and a Companies Office search.