NDA with potential acquirer — anything I should push back on?

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?

Key things to check in M&A NDAs:

1. Mutual vs one-way: Should be mutual. You'll share info, but they might share acquisition plans/terms that should also be confidential.

2. Non-solicitation of employees: Common and reasonable — they shouldn't poach your team if deal falls through.

3. Standstill provision: Watch out — this can prevent you from talking to other potential acquirers. Strike it or limit to 6 months max.

4. Term: 2-3 years is standard for confidentiality. Longer is OK for trade secrets.

sold my company last year. the one thing I wish I'd pushed back on: their NDA prohibited me from disclosing that discussions were happening. made it hard to get competing offers. try to carve out ability to discuss with other potential acquirers (without sharing their specific terms)

Also check the definition of "confidential information." Some acquirers define it so broadly that even public info about your company becomes "confidential." Should be limited to non-public information you actually mark or identify as confidential.

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.

UPDATE: Pushed back on standstill and got it reduced to 6 months with a fiduciary out. Also made the NDA mutual. They were pretty reasonable about it once I explained my concerns. Starting due diligence next week.

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.

Congrats on getting those revisions @AcquiPrep! Good sign that they were reasonable about it.

@AcquiPrep 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.