Non-disclosure agreements (NDAs) are a staple in private equity and M&A, yet their effectiveness often hinges on the fine print. In theory, these agreements protect sensitive deal information, ensuring that confidential data exchanged during negotiations doesn’t fall into the wrong hands. But in practice? They’re often either too rigid—scaring off potential investors—or too loose, leaving firms vulnerable to leaks and competitive misuse.

For private equity professionals and M&A dealmakers, NDAs are more than just legal formalities; they set the tone for trust and transparency between counterparties. A poorly drafted NDA can derail a transaction before it even begins, while a well-structured agreement can facilitate open discussions, fostering smoother negotiations. Given the rising regulatory scrutiny and aggressive deal sourcing in today’s markets, getting NDAs right isn’t optional—it’s a strategic necessity.

Yet, many firms still rely on boilerplate templates that fail to account for industry nuances. What works for a tech buyout might be overkill in a middle-market real estate deal. Similarly, an NDA designed for a venture capital negotiation won’t necessarily hold up in a complex cross-border acquisition. So, what separates an airtight NDA from one that barely holds water? And how can dealmakers strike the right balance between enforceability and flexibility?

Key NDA Provisions in Private Equity and M&A Deals: What Really Matters?

The first mistake many deal teams make is assuming that all NDAs are the same. While confidentiality is the core purpose, a strong NDA in private equity or M&A needs to address far more than just information protection. Investors, buyers, and sellers must consider several key provisions that impact negotiations, legal enforceability, and future liabilities.

1. Confidentiality Scope: Defining What’s Off-Limits

One of the most overlooked clauses in NDAs is how “confidential information” is defined. A vague or overly broad definition can create friction, with counterparties reluctant to sign an agreement that limits their operational flexibility. On the other hand, a definition that’s too narrow could leave gaps, exposing sensitive financials or deal terms to competitors.

Best practice? Confidentiality clauses should specify whether they cover:

• Financial projections, business plans, and customer data
• Internal trade secrets, technology roadmaps, and proprietary algorithms
• Deal terms, valuation models, and funding structures

A strong NDA clarifies what’s protected without unnecessarily restricting parties from using general industry knowledge gained during discussions.

2. Term Length: Temporary vs. Perpetual Confidentiality

How long should confidentiality obligations last? Investors typically resist NDAs with perpetual confidentiality clauses, arguing that deal-specific information loses relevance over time. In private equity and M&A, a term of one to three years is standard, though some industries (e.g., biotech and defense) may warrant longer durations.

3. Standstill Agreements: Limiting Buyer Overreach

For sellers, NDAs often include standstill clauses preventing prospective buyers from making hostile bids or approaching shareholders directly. While this protects sellers from predatory tactics, it can also deter investors who see such provisions as excessive. Firms must weigh whether the benefits of deal security outweigh potential investor hesitation.

4. Non-Solicitation: Preventing Talent Poaching

In PE and M&A, deal negotiations often involve introductions to key executives, portfolio company managers, or industry specialists. A poorly drafted NDA might allow a potential investor to later hire away critical personnel without consequence. Well-structured NDAs include non-solicitation clauses that prevent talent raids while still allowing for organic hiring discussions.

5. Carve-Outs and Exclusions: Avoiding Overreach

No investor wants to sign an NDA that restricts them from making future investments in an entire sector just because they reviewed one deal. That’s where carve-outs come in—exempting publicly available information or independently developed knowledge from confidentiality obligations. These provisions prevent NDAs from becoming overly restrictive, ensuring they don’t block routine deal activity.

6. Jurisdiction and Enforcement: Where Legal Battles Play Out

Cross-border deals require careful jurisdiction selection. An NDA governed under Delaware law, for instance, may differ significantly from one under UK or Hong Kong jurisdiction. Enforceability varies by region, and dealmakers must ensure the agreement aligns with local legal frameworks.

Ultimately, a strong NDA isn’t just about ticking legal boxes—it’s about striking a balance that fosters trust, enables negotiations, and minimizes legal disputes down the line.

Balancing NDA Restrictions and Deal Progress: Avoiding Investor Pushback

NDAs should protect confidential information, but a common pitfall is making them too restrictive, inadvertently slowing down the very deals they’re meant to facilitate. Many investors bristle at NDAs that feel overly aggressive, particularly those with broad standstill clauses or indefinite confidentiality terms.

1. The Investor Perspective: Why Some NDAs Are Deal Killers

From an investor’s standpoint, NDAs can sometimes feel like a legal trap. Some common red flags include:

• Overly broad confidentiality clauses that could limit their ability to pursue other deals.
• Excessive non-solicitation clauses that restrict future hiring for unrelated companies.
• Unlimited time frames that create permanent obligations.

Private equity firms conducting multiple deals a year can’t afford to sign agreements that limit their flexibility indefinitely. That’s why the best NDAs offer reasonable carve-outs—acknowledging that investors may engage with multiple companies in the same sector and should not be unfairly restricted from future transactions.

2. Avoiding Friction in Competitive Bidding Processes

In competitive M&A auctions, where multiple buyers review the same target, NDA flexibility can determine whether a firm stays in the race or walks away. If one bidder’s NDA is too restrictive compared to others, they may drop out early—giving competitors a leg up.

This is particularly relevant in tech and healthcare, where strategic acquirers and financial buyers compete aggressively for proprietary technology and high-growth assets. Sellers must find a middle ground: securing confidentiality while keeping the pool of potential buyers engaged.

3. How to Draft NDAs That Don’t Scare Off Investors

To avoid unnecessary deal friction, firms should tailor NDAs with the following best practices:

• Use industry-standard term lengths (typically 12–24 months).
• Limit standstill provisions to situations where a hostile bid is a real risk.
• Clarify non-solicitation clauses to prevent excessive hiring restrictions.
• Allow carve-outs for publicly available or independently developed information.

These adjustments help ensure NDAs serve their core function—enabling secure discussions—without becoming a barrier to dealmaking.

4. Striking the Right Balance in PE and M&A Transactions

While private equity funds and M&A firms have a vested interest in protecting deal-related intelligence, excessive NDA restrictions can often backfire. The key is to negotiate terms that both sides can realistically uphold, ensuring that information security does not come at the cost of deal momentum.

5. The Role of Lawyers in NDA Drafting

In many deals, legal teams draft NDAs with a defensive mindset, aiming to protect their clients from every possible risk. However, experienced dealmakers know that an NDA riddled with excessive legalese can become a negotiation hurdle. The best NDAs balance legal protection with commercial practicality, allowing discussions to proceed without unnecessary friction.

When designed effectively, NDAs facilitate—not obstruct—deal progress. Investors and sellers alike benefit from agreements that provide clear guidelines while leaving room for strategic negotiations.

High-Profile NDA Disputes in Private Equity and M&A: Lessons from Litigation

Most NDAs remain quietly in the background of deals, doing their job without drama. However, when disputes arise, they can expose major flaws in contract drafting.

1. The Goldman Sachs–NextG Wireless Case: The Risk of Loose Carve-Outs

Goldman Sachs found itself in the middle of an NDA controversy when it advised NextG Wireless on a potential sale. The investment bank had signed a confidentiality agreement, but a loophole in the NDA’s carve-out provision allowed it to use certain deal-related insights for other transactions. When NextG was ultimately acquired by another firm, Goldman later advised a competing buyer in a similar space—sparking a dispute over whether confidential information had been misused.

A vague carve-out can render an NDA useless. If an agreement allows broad exceptions for “independent knowledge” or “publicly available information,” firms must define precisely what qualifies to prevent legal ambiguity.

2. Elon Musk vs. Twitter: When NDAs and Due Diligence Collide

The 2022 Twitter buyout saga showed how NDAs intersect with due diligence failures. Elon Musk had signed an NDA when evaluating the platform’s acquisition but later argued that Twitter misrepresented key financial and user data—leading to a high-profile legal battle.

Takeaway: Even with an NDA in place, buyers must ensure they have ironclad due diligence provisions. An NDA cannot protect against fraud or material misrepresentation—dealmakers need separate warranties and disclosures to safeguard their interests.

3. The Apollo Management Case: Enforcing NDAs Against Former Employees

Private equity firms frequently share sensitive deal information with partners, advisors, and executives under strict NDAs. However, when former Apollo Global Management employees attempted to start a competing fund using proprietary investment strategies, the firm took legal action. Courts sided with Apollo, upholding the NDA’s non-solicitation and confidential information clauses.

NDAs are only as strong as their enforcement mechanisms. If a firm wants to prevent talent poaching or unauthorized strategy replication, clear non-solicitation and non-compete clauses are critical.

While NDAs don’t prevent every dispute, they set legal expectations that can determine the outcome of litigation. The key is ensuring that the agreement is specific, enforceable, and tailored to the deal’s risk profile.

Customizing NDA Templates for Different Deal Structures

One-size-fits-all NDAs are a mistake in private equity and M&A. The terms should align with the nature of the transaction, the level of risk, and the strategic interests of the involved parties.

1. NDAs for Venture Capital vs. Buyouts: Why They Differ

A venture capital NDA is typically less restrictive than one used in a leveraged buyout (LBO). Early-stage investors look at dozens of startups each year, making it impractical to sign NDAs that could prevent them from investing in competitors. On the other hand, in an LBO, where financials, customer contracts, and operational data are deeply examined, NDAs must be far more airtight.

For VC deals, key NDA considerations include:

• Shorter confidentiality terms (6-12 months instead of 3-5 years).
• Broader carve-outs allowing investors to explore similar deals.
• Limited non-solicitation provisions, since many VCs operate within small, interconnected talent pools.

For buyout deals, the NDAs should:

• Extend confidentiality for multiple years (sometimes even post-closing).
• Strictly define confidential materials, especially when sensitive financials are disclosed.
• Include explicit standstill provisions to prevent preemptive takeover attempts.

2. Cross-Border Deals: Navigating Jurisdictional Challenges

A UK-based private equity firm acquiring a target in Asia or the US must consider differences in NDA enforceability. For example:

• The UK and EU tend to favor GDPR-aligned data protections, making confidentiality breaches more serious.
• The US allows greater NDA flexibility, but litigation over non-solicitation clauses is common.
• China has strict trade secret protections but often weak enforcement mechanisms in cross-border disputes.

To mitigate risk, firms should align NDAs with local legal frameworks, ensuring that jurisdictional variances don’t create loopholes.

3. Distressed M&A and NDAs: Why They Require Extra Caution

When acquiring a distressed company, NDAs must account for potential creditor disputes and post-transaction liabilities. If a target is under financial duress, information leaks can severely impact valuation, lender negotiations, and regulatory approvals.

To prevent leaks, distressed deal NDAs often include:

• Tighter access controls (limiting data to a small group of decision-makers).
• Shortened disclosure windows (to prevent sensitive financials from becoming public before the sale closes).
• Stronger indemnification clauses, ensuring that breaches result in financial penalties.

Unlike traditional M&A, distressed deals often operate under compressed timelines, meaning NDAs must be structured to prevent leaks without creating delays.

Are NDAs in Private Equity and M&A Becoming Less Effective?

In some sectors, NDAs are losing their teeth due to increasing deal volume and investor pushback. Many investors argue that overly restrictive NDAs limit their ability to explore competing deals, particularly in fast-moving industries like tech and fintech.

1. The Rise of Mutual NDAs

Historically, sellers have held more power in NDA negotiations. But in today’s competitive M&A landscape, mutual NDAs—where both parties agree to reciprocal confidentiality obligations—are becoming more common.

This shift is particularly relevant in:

• Seller-friendly markets, where investors must compete for access to top-tier targets.
• High-tech and biotech deals, where intellectual property risks apply to both buyers and sellers.
• Cross-border transactions, where regulatory scrutiny affects both sides equally.

2. Investors Pushing Back Against Overly Broad NDAs

Private equity investors are pushing back against NDAs that contain:

• Indefinite confidentiality clauses (investors prefer 12-24 months).
• Excessive non-solicitation restrictions, which limit future hiring options.
• Unenforceable standstill clauses, particularly in competitive bidding situations.

As a result, dealmakers must strike a balance—protecting sensitive information without driving investors away.

3. Alternative Approaches to Confidentiality

Some firms are adopting alternative approaches to confidentiality that go beyond traditional NDAs, including:

• Data rooms with tiered access permissions, reducing reliance on contractual protections.
• Blockchain-based confidentiality agreements, offering immutable proof of disclosure timelines.
• AI-driven document monitoring, tracking when and how confidential materials are accessed.

While NDAs remain foundational in private equity and M&A, their effectiveness will increasingly depend on how well they’re tailored to modern deal complexities.

NDAs remain a critical tool in private equity and M&A, but their effectiveness depends on how well they’re structured, negotiated, and enforced. While generic NDAs might work for routine transactions, high-stakes deals require customized agreements that reflect the unique risks, industry dynamics, and jurisdictional considerations involved. From cross-border transactions to distressed acquisitions, the right NDA can make or break deal security.

As investor pushback grows and deal complexities increase, private equity and M&A professionals must rethink how they approach confidentiality. NDAs should protect information without hindering deal flow, balancing legal safeguards with commercial practicality. For firms looking to sharpen their NDA strategies, staying ahead of legal trends, enforcement precedents, and investor expectations isn’t just advisable—it’s essential.