The Email Before the NDA: Protecting a Family Company

The situation

Rejean and Luc, both specialist physicians, and their cousin Kofi had spent close to twenty years building a group of diagnostic imaging clinics across the eastern GTA, with its head office in Whitby. Rejean was a surgeon who had stepped back from day-to-day clinical work to run operations; Luc still practiced part-time as a specialist physician while chairing the company's board; Kofi handled finance and had never worked clinically at all. Between them, the three held all the shares in a company that, after two decades of steady growth, was worth somewhere in the range of $50 million to $80 million depending on how its equipment leases and real estate holdings were valued.

None of the three had ever put the company up for sale. There had been informal talk over the years about eventually bringing in a partner or selling to a larger group once Rejean was ready to retire, but nothing formal, and no advisors had been engaged. Then, on a Tuesday morning, Kofi received an email from someone identifying themselves as a director of corporate development at a private equity-backed healthcare consolidator. The email was polite, specific about the company by name, and asked for two things: a call within the next two weeks, and in the meantime, three years of financial statements, a list of equipment leases, and a summary of referral relationships with local physicians, so the buyer's team could "begin preliminary valuation work."

The problem

Kofi's instinct was that sending the numbers quickly would show the company was organized and serious, and might speed things along if this turned into a real opportunity. Rejean was more cautious and asked the family's accountant, who suggested they speak with a lawyer before responding to anything. That call happened before a single document had gone out, which is what made the outcome different from how these situations often unfold.

Once information leaves a company's hands, the company loses control of it. A non-disclosure agreement, often called an NDA, is a contract that restricts what the person receiving confidential information is allowed to do with it — who they can show it to, how long they have to keep it confidential, and what happens if they walk away from the deal. Without one in place, there is no binding restriction on a prospective buyer's use of financial statements, lease terms, or referral relationships once they have been handed over. A buyer who decides not to proceed has no legal obligation to delete or ignore what it already learned.

This mattered here in a specific way. The company's referral relationships — which local physicians sent patients to which clinic, and on what terms — were arguably its most sensitive competitive information, more so than the raw revenue numbers. A private equity-backed consolidator actively acquiring clinics across the region was, by definition, either a future partner or a future competitor. If the deal did not close, that same information in the hands of a well-funded competitor could be used to build a rival referral network, recruit the group's physicians directly, or simply undercut on service in the areas the company had spent years developing. There was also no indication yet of who was actually behind the inquiry — the private equity fund itself, an operating company it controlled, or an intermediary — which mattered for knowing exactly who would be bound by any confidentiality promise.

Family-owned businesses approached this way are also vulnerable to a pacing problem. A well-resourced buyer's team moves quickly and treats early cooperation as a signal of how negotiations will go. Family shareholders without deal experience can feel pressure to keep pace, and end up disclosing more, faster, than they would if they had set the terms of engagement first.

What we did

1. Paused the response entirely. Our team advised the family not to send any documents or hold a substantive call until a confidentiality agreement was signed, and drafted a short, professional reply thanking the buyer for the interest and proposing that the parties first put an NDA in place before any further exchange.
2. Identified the actual counterparty. Before drafting anything, we asked the buyer's representative to confirm which specific legal entity would be bound by the agreement — the fund, a holding company, or an affiliate — since an NDA signed by the wrong entity offers little real protection. This also surfaced that a separate, previously formed affiliate of the same fund had approached another clinic group in the province the year before, information the family had not had visibility into on their own.
3. Drafted a two-way but asymmetric NDA. The agreement was structured to protect the company's information broadly while imposing lighter obligations on the family, since only one side was actually disclosing sensitive material at this stage. It defined confidential information to explicitly include referral relationships and physician arrangements, not just financial data, and required written consent before any of it could be shared with the buyer's outside consultants or lenders.
4. Built in a standstill and a no-solicitation clause. The NDA included a term preventing the buyer from soliciting the company's physicians or staff for a period after any discussions ended, and a separate restriction preventing the buyer from using anything it learned to inform a competing clinic strategy in the same region, whether or not a deal proceeded.
5. Set a defined, limited disclosure sequence. Rather than sending three years of full financials up front, we recommended releasing a summarized, de-identified overview first — enough for the buyer to assess whether its interest was genuine — with full financial statements and referral data held back until the buyer had made a preliminary, non-binding indication of value.
6. Advised the family to engage a financial advisor before any numbers moved. Because none of the three shareholders had run a sale process before, we recommended bringing in an independent advisor experienced in healthcare transactions to assess whether the eventual offer reflected a fair value for the company, separate from the legal protections around disclosure.

The outcome

The buyer's representative signed the NDA within a few days, which the family took as a reasonable sign of genuine interest rather than a company simply gathering competitive intelligence under the cover of an acquisition inquiry. Preliminary, summarized information went out under the agreement's protection; full financial statements and the physician referral summary were held back until a non-binding indication of value came in some weeks later, in a range the family and their new financial advisor considered worth pursuing further.

Because the confidentiality terms were in place before anything sensitive changed hands, the family never had to find out what would have happened if the buyer had walked away after seeing full financials and referral data with no contractual restriction on their use. That is the nature of prevention work: the value shows up as a risk that never materialized rather than a dramatic recovery. No breach occurred, no information was misused, and no one can say with certainty how likely misuse would have been if the family had simply emailed the requested documents the week they arrived, as Kofi had first been inclined to do.

Talks with the buyer continued for several more months on the basis of the protected disclosure sequence. Whether that process eventually produced a completed transaction is a separate story from this one — the point at which our team's role in this engagement was complete is the point at which the family had control over their own information for the first time since the inquiry arrived, rather than having already given it away.

What you can learn from this