Why You Need an NDA Before Sharing Financials With a Buyer in Ontario

At some point in almost every conversation with a prospective buyer, they'll ask to see the numbers — revenue, margins, customer concentration, payroll. That's a reasonable request, and buyers genuinely need financial information to decide whether a deal makes sense. The question isn't whether to share it eventually; it's whether you require an NDA before sharing financials with a buyer, and most experienced Ontario sellers say yes, every time.

This article explains what a non-disclosure agreement (NDA) actually does, when to require one, and what a properly drafted version should cover.

What an NDA Actually Does

A non-disclosure agreement (also called a confidentiality agreement) is a contract in which the buyer agrees to keep the information you share confidential and to use it only for the purpose of evaluating the potential purchase — not for any other business purpose, and not to share it further without your consent. It doesn't stop a determined bad actor from misusing information, but it does two important things: it creates a legal basis to pursue a claim if they do, and — just as importantly — it signals that you take confidentiality seriously, which tends to shape how carefully a legitimate buyer handles what you give them.

When to Require One

A practical way to think about it: the more sensitive or specific the information, the earlier an NDA belongs in the conversation.

• Publicly available or generic information — industry, general size, rough location — usually doesn't need an NDA to discuss.
• Anything beyond that — actual revenue figures, margins, customer names, supplier terms, employee counts and compensation, or full financial statements — should generally not go out until a signed NDA is in place.
• Before a facility visit or management meeting. If a buyer wants to see the operation in person or talk to your team, that's a strong signal you're past the point where an NDA should already be signed.

Requiring an NDA before financial detail goes out isn't a sign of distrust — it's standard practice, and a serious buyer will expect to sign one without objection.

What a Solid NDA Should Cover

A properly drafted NDA for a business sale generally addresses:

• [ ] A clear definition of what counts as "confidential information" — broad enough to cover financials, customer lists, and operational details, not just documents marked "confidential."
• [ ] A restriction on the purpose the buyer can use the information for — evaluating the potential purchase, and nothing else.
• [ ] A limit on who the buyer can share the information with — typically their own advisors, on a need-to-know basis, and only if those advisors are bound by similar confidentiality terms.
• [ ] A non-solicitation clause, so the buyer can't use what they learn about your employees or customers to poach them if the deal doesn't close.
• [ ] A defined term — how long the confidentiality obligation lasts, since "forever" is rarely realistic or necessary.
• [ ] What happens to the information (return or destruction) if the deal doesn't proceed.
• [ ] Ontario governing law and a clear process for resolving a dispute if one arises.

A generic template pulled off the internet may miss several of these, particularly the non-solicitation piece, which matters a great deal in a business sale specifically.

One-Way vs. Mutual NDAs

Most NDAs in a business sale context are one-way — the seller is disclosing sensitive information and wants protection, while the buyer typically isn't sharing anything comparably sensitive in return. That said, some deals call for a mutual NDA, particularly where the buyer is also a business that will share its own confidential information (for example, in a merger between two operating companies, or where the buyer discloses financing details or its own strategic plans). Your lawyer can help you decide which structure fits your specific transaction.

What an NDA Can't Do

It's worth being realistic about the limits:

• An NDA doesn't prevent a leak — it creates a legal remedy after the fact, which is rarely as good as preventing the leak in the first place.
• It's only as strong as your ability to enforce it, which usually means being able to show the buyer actually misused the information — not always straightforward.
• It doesn't replace other confidentiality practices, like staged disclosure and controlled data-room access; it's one layer among several.

An NDA is a necessary foundation, not a complete confidentiality strategy on its own.

Frequently asked questions