Article / 27 May 2025

Keep quiet and carry on: the role of NDAs in M&A

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Gateley Middle East

The exchange of sensitive information is inevitable in M&A transactions. Before a buyer can make an informed offer, they will need access to non-public information about the target business. But here is the catch: this information is valuable and without proper protection, it is at risk. That is where non-disclosure agreements (NDAs) come into play.

NDAs are generally enforceable under UAE law provided the restrictions are reasonable, not overly broad, vague or concern matters of public interest.

Without an NDA, there are several risks sellers face. These include:

  • Exposing trade secrets: Information such as customer lists, proprietary technology and business strategies are precious assets. Exposing them could wipe out your competitive edge.
  • Damaging relationships: If confidential details get out, customers and suppliers might reconsider their contracts, hurting existing business relationships.
  • Unfair advantage for other buyers: If multiple parties are in the running for the same target company, sharing confidential information without an NDA gives certain buyers an upper hand.
  • Empowering competitors: Competitors can use confidential information to gain an unfair advantage: targeting key customers, suppliers or even employees.
  • Destabilising the workforce: Employee productivity and morale may suffer if sensitive details become public.

What should you include in an NDA to protect your interests?

For an NDA to truly protect your interests, it needs to contain the right provisions. Sellers should look for the following protections to ensure their sensitive information stays safe.

  1. Clear use restrictions: The buyer should only be allowed to use the confidential information to evaluate or negotiate the deal. The NDA should specify that only employees or advisors directly involved in the transaction can have access to the data, and unless required by law, they should not share it with anyone else.
  2. Duration of confidentiality: Sellers often prefer indefinite confidentiality, while buyers might ask for a set period (usually two to five years). The seller should negotiate a duration long enough to protect their interests without unnecessary limitations.
  3. Broad definition of confidential information: The NDA should clearly define what qualifies as confidential information – this includes everything from customer lists to trade secrets. You may also want to limit access to certain types of information through secure channels like virtual data rooms or read-only inspections.
  4. Dispute resolution and governing law: In cross-border transactions, it’s important to specify which laws will govern the NDA and how any disputes will be resolved. Sellers should ensure that legal remedies, such as financial compensation or specific performance, are enforceable in a jurisdiction that works in their favour.
  5. Return or destruction of confidential information: If the deal does not go through, the seller should require the buyer to return or destroy all confidential materials. It is not uncommon for buyers to ask for exceptions, like keeping certain copies of certain documents for audit purposes, so these scenarios should be addressed clearly in the agreement.

Which NDA should you use?

When it comes to drafting an NDA, the type of agreement you choose depends on how the information is shared.

  • Mutual NDAs: These are used when both parties are exchanging confidential information. For example, if the buyer is sharing financial details or sensitive business plans, both sides will need protection. Mutual NDAs are also common if both sides are negotiating terms and want to keep everything under wraps.
  • One-way NDAs: These are often used when only one party (usually the seller) is disclosing sensitive information. If the buyer is asking to look at financials, business strategies or customer data, a one-way NDA helps to ensure the target business’s confidential information stays protected.

Even if the buyer is not initially sharing information, they may want the details of the negotiation to remain confidential. This often makes mutual NDAs the best choice in M&A deals.

NDAs as pillars of trust in M&A

An NDA is more than just a piece of paper – it is the first line of defence in a successful M&A transaction. By establishing clear boundaries and protections around the flow of information, both buyers and sellers can negotiate confidently knowing their sensitive data is safe.

Sellers should ensure the NDA covers all aspects of confidentiality, including what information is protected, how long the protection lasts and how disputes will be handled. Choosing the right type of NDA and including these critical provisions can help secure a smooth, successful deal and give both parties peace of mind throughout the process.

Get in touch

To discuss any of the issues raised in our series, please get in touch with a member of the Gateley Middle East corporate team.

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