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Starting a Business

Are there limitations when signing an NDA from a company that is interested in buying me out?

min read
Opinions expressed by Entrepreneur contributors are their own.
Generally, an NDA does not prevent you from sharing your confidential information with others--only the confidential information of the other party. Where you want to be careful with an NDA is in its scope. Here, you'll want your NDA to say that you're sharing information for a particular purpose -- to see if there is a basis for moving forward with a buyout--not for confidential purposes for all time. However, you may not be such an attractive buyout target if you're running around town sharing your confidential information with others. Best to clarify whether you'll be handling one "suitor" at a time or whether you have the right to share the information with others at the same time. Also, you'll want to secure the return of your confidential information within a short time (7-10 days) after you have concluded negotiations (especially if the other company decides not to go forward). As to the royalties, I can't stress enough that you should have an attorney advising you should the negotiations go forward. An attorney who is experienced in your area will have a strong sense of what royalty structures work best (and to your best advantage) for your kind of deal and what's realistic.

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