As a business owner, you may run into situations that require you to share private and/or confidential information with another individual or company. Other times you may simply want to formally recognize your relationship with another party as confidential.
If you don’t want this sensitive information to be seen or heard by prospective customers, vendors, collaborators or even visitors – a non-disclosure agreement, also called an NDA, may be a smart way to protect your interests.
In layman’s terms, NDAs are legal documents which state that a company can take legal action against anyone who shares private information that they agreed not to reveal. It can be something as specific as a trade secret or as vague as a design or business concept.
An NDA makes sense any time you want to share something valuable about your business. It should be specific and clear – because if a matter ended up in court, clarity can be your ally.
Here are some situations that may call for creating an NDA for your business:
- Your employees have access to confidential and proprietary information. Are your employees prohibited from opening a competing business using valuable knowledge?
- You present an offer to a potential partner or investor. New opportunities are exciting but can reveal sensitive information to another party. Business financials, personal information, etc.
- You receive services from a company that has access to sensitive information. Let’s say you run ad campaigns for brands that collect a lot of data on their audiences. This gives you access to this sensitive, very valuable data belonging to that brand. Sometimes you have to help a company see the need to protect both of your businesses.
- You share business information with a prospective buyer. In a buy-out or acquisition offer, all of your financial and operational “cards” are on the table. Which buyers are serious and which individuals are simply kicking the tires? Creating an NDA can give you peace of mind.