What the agreement is meant to control
A due diligence agreement often takes the form of a confidentiality or nondisclosure agreement, sometimes with access terms attached. It defines what counts as confidential, who on the other side may see it, including advisers and financing sources, and the purposes for which it may be used. Many also include a promise not to solicit the company's employees or customers for a period, and in deals involving public companies, a standstill restricting share purchases. The agreement usually states that it does not obligate either side to complete a transaction, which matters when talks end. Courts generally enforce these terms as written, so the wording carries real weight.
When buyer and target compete
If the two companies compete, sharing current pricing, customer-specific terms, or future plans before closing can raise antitrust concerns, even when the deal is lawful. A clean team arrangement limits that information to a small group, often outside advisers or employees walled off from commercial decisions, who report only summaries. The agreement should say who is on the team, what they can share, and how materials are handled if the deal does not close. Companies also need to consider privacy laws when customer or employee data is in the data room, and export control rules when technical data is involved.
Negotiating the terms
The disclosing party usually wants broad definitions and long restrictions, while the reviewing party wants exceptions for information it already has or develops independently, along with workable return and destruction terms. Points worth discussing include the length of the confidentiality obligation, how remedies for breach are handled, whether there is a residuals clause allowing use of what people remember, and which law and courts govern. Bring the term sheet or letter of intent if there is one and a description of the information that will be shared. We tailor the agreement to the deal and to the relationship between the parties, rather than signing the other side's form unchanged.
