Larger company approached us about acquisition. Before sharing any details, they sent over their NDA. First time through this process. Their NDA is 8 pages. Anything specific I should watch out for?
Idk but found it — there IS a standstill provision. Says I can't "solicit, encourage, or participate in discussions with any third party regarding a potential acquisition" for 18 months. That seems way too long.
18 months is aggressive. Counter with: (1) strike it entirely, or (2) reduce to 6 months, or (3) add "fiduciary out" language that lets you talk to other parties if your board determines it's in shareholders' best interest.
Legitimate acquirers expect pushback on standstills. If they won't budge at all, that's a yellow flag about how they negotiate.
This thread is gold - bookmarking for when we start our process. One thing I'd add: also check for "no-shop" provisions hidden in the NDA. Similar to standstill but sometimes worded differently fwiw.
Congrats on getting those revisions @omar_s! Good sign that they were reasonable about it.
@omar_s any update on how due diligence went? We're about 3 weeks behind you in a similar process and would love to hear how it played out.
Also wondering if you used any of the demand letter templates from this site when negotiating the NDA terms? Trying to figure out best practices for documenting everything.
Slightly off topic but relevant - make sure your cap table is clean before DD starts. We had a nightmare because our SAFE cap table calculator showed different numbers than what the acquirer's lawyers calculated. Spent 2 weeks sorting that out.