M&A NDA Case Studies

TechCorp, a mid-sized software company, was running a competitive sale process with five potential strategic acquirers. The investment bank managing the process had each bidder sign a comprehensive NDA with a non-circumvention provision. One bidder, seeking to gain an advantage, hired a consultant who had previously worked at the investment bank. Through this consultant, the bidder learned the identities of all other bidders and their preliminary valuation ranges.

Armed with competitive intelligence, the bidder strategically adjusted their bid timing and valuation, ultimately winning the deal. Another bidder later discovered the information leak when their own internal discussions were referenced in post-closing integration planning documents that were inadvertently shared.

The disadvantaged bidder initiated arbitration under the NDA's dispute resolution clause. While proving damages was challenging, the arbitrator found a clear breach of the confidentiality provisions. The settlement included a significant payment to the disadvantaged bidder and covered their legal fees.

GlobalMfg, a large manufacturing conglomerate, was evaluating the acquisition of PrecisionParts, a specialty components manufacturer with proprietary production techniques. GlobalMfg's legal team insisted on including a broad "residuals clause" in the NDA, allowing them to use any information retained in their employees' unaided memories after the due diligence process.

PrecisionParts' counsel initially rejected the residuals clause outright, concerned that GlobalMfg could walk away from the deal having learned their manufacturing secrets for free. After several rounds of negotiation, the parties agreed to a modified approach.

The final NDA included a residuals clause with important limitations: (1) core manufacturing processes and formulations were explicitly excluded from residuals treatment; (2) any use of retained information was subject to a 3-year non-compete if the deal didn't close; and (3) GlobalMfg agreed to limit due diligence team composition to individuals who wouldn't work on competing products.

Two competing pharmaceutical companies, PharmaCo A and PharmaCo B, were exploring a merger. Given their competitive relationship, sharing pricing strategies, customer lists, and pipeline information raised significant antitrust concerns. Gun-jumping violations could result in substantial penalties and jeopardize regulatory approval.

The parties implemented a comprehensive clean team arrangement with three tiers of information access:

The NDA included detailed protocols for each tier, requiring physical and electronic separation of materials, mandatory training for all participants, and certification requirements before accessing each level.

When the antitrust regulators reviewed the transaction, they specifically commended the parties' information protocols. The well-documented clean team procedures demonstrated the parties' commitment to compliance and helped expedite the regulatory review. The merger was approved with minimal divestitures, and the deal closed on schedule.

Apex Capital, a private equity firm, sought to acquire FastLogistics, a regional logistics company. However, Apex also owned MegaFreight, a larger logistics company that competed with FastLogistics in several markets. FastLogistics' management was concerned that sharing confidential business information could disadvantage them if the deal didn't close.

FastLogistics' key concerns included: (1) customer pricing and contract terms that could be used to poach customers; (2) operational efficiency data that could help MegaFreight compete more effectively; and (3) employee compensation information that could facilitate targeted recruiting.

The parties agreed to a comprehensive information barrier structure:

• Firewalled Deal Team: Only Apex personnel with no operational role at MegaFreight could access FastLogistics information
• External Advisors: Financial and operational due diligence conducted by advisors not working for MegaFreight
• Aggregated Data: Customer-specific data provided only in aggregated form unless specific customer consent obtained
• Escrow Arrangement: Most sensitive materials held in escrow pending definitive agreement signing
• Non-Hire Provision: Extended non-hire period for FastLogistics employees if deal doesn't close

USBuyer, a US-based technology company, was acquiring EuroTarget, a German software company with customers across the EU. The due diligence process required sharing significant personal data, including employee records, customer databases, and user analytics data.

Multiple data protection challenges emerged during NDA negotiation:

• Employee data required works council consultation in Germany before sharing
• Customer data transfer to US raised GDPR Chapter V compliance issues
• User analytics contained behavioral data requiring legitimate interest assessment
• US data room provider's security certifications were questioned

The parties developed a comprehensive data protection addendum to the NDA:

The NDA required USBuyer to access the data room only through EU-based servers, with SCCs governing any inadvertent transfers. Employee data was shared only after works council consultation, and customer databases were pseudonymized before sharing, with actual customer identities revealed only at signing.

StrategicBuyer, a public company, entered into an NDA with PublicTarget to explore a friendly acquisition. The NDA included a broad standstill provision preventing StrategicBuyer from acquiring PublicTarget stock, making public proposals, or taking actions to influence the board for 18 months.

After months of due diligence and negotiation, PublicTarget received an unsolicited offer from a third party at a higher price. PublicTarget's board terminated discussions with StrategicBuyer to pursue the competing offer. StrategicBuyer wanted to make a topping bid but was prohibited by the standstill from:

• Making a public announcement of their willingness to pay more
• Communicating directly with PublicTarget shareholders
• Requesting that the board waive the standstill to consider their higher offer

StrategicBuyer argued that the standstill should not apply once the target decided to sell to a third party. However, the NDA language was clear and contained no "fiduciary out" for the standstill. After expensive litigation, StrategicBuyer was unable to participate in the auction, and the third party acquired PublicTarget for less than StrategicBuyer was willing to pay.