Non-Disclosure Agreement (NDA)

A mutual NDA is the wrong default when you are the one disclosing. You are handing over financials, customer lists, supplier terms and employee pay to someone who may be a competitor. They disclose almost nothing. This template is drafted from the seller’s side and says where a buyer will push back.

0 of 4 parties named4 blank

Still blank: Seller, Buyer, Business, Governing state. These print as underscores on the page.

4 of 9 clauses hold up wellthe rest are weaker than they read

strongNon-solicitation of employeesEnforceable in most states with a reasonable period. The clause with real teeth.

strongNon-solicitation of customersEnforceable where the buyer learned of them through diligence.

strongReturn or destructionStraightforward and rarely contested.

strongNo obligation to proceedProtects both sides; nobody argues with it.

mediumDefinition of confidential infoOnly as strong as its carve-outs. Broad definitions get narrowed by courts.

mediumPermitted recipientsNecessary. The buyer's lender and accountant must see the numbers.

mediumTerm of confidentialityLonger is not better. Courts trim unreasonable periods entirely.

weakInjunctive relief languageStandard, but a judge decides irreparable harm regardless of what you agreed.

weakLiquidated damagesFrequently struck down as a penalty unless the figure is a genuine estimate.

Parties

Seller (disclosing)

Buyer (receiving)

Business

Governing state

Terms

Confidentiality period: 3 years

Two to five is standard. Longer periods get trimmed by courts, and asking for ten signals inexperience.

Non-solicitation: 2 years

Non-solicitation covers

Staff only is easier to get signed. Customers matter more if the buyer is a competitor.

Template — not a legal document

TEMPLATE, NOT A LEGAL DOCUMENT. This is an educational template produced by ExitAdviser to show what a seller-side non-disclosure agreement normally contains and why each provision is there. It has not been drafted for your transaction, your state, or your circumstances, and nobody has reviewed it on your behalf. It is not legal advice and no attorney-client relationship arises from using it. Laws differ by jurisdiction and change over time. Have a qualified attorney draft or review any agreement before you sign it.

Non-Disclosure Agreement

Confidentiality & Non-Solicitation · Seller-Side

This Agreement is entered into as of date by and between Seller name (“Discloser”), the owner of business name (the “Business”), and Buyer name (“Recipient”), in connection with Recipient’s evaluation of a possible acquisition of the Business (the “Transaction”).

1.Confidential InformationMedium

“Confidential Information” means all non-public information about the Business disclosed by Discloser, including financial statements, tax returns, customer and supplier lists and terms, pricing, employee compensation, contracts, and the fact that the Business is for sale. It excludes information that is publicly available, was already known to Recipient without obligation, or is independently developed without use of Confidential Information.

The carve-outs are where this clause is won or lost

A definition without carve-outs is not stronger — it is weaker, because a court will narrow an unreasonable one. The clause that matters most to a seller is the last one: that the business is for sale. If that leaks, staff leave, customers hesitate and competitors circle, whether or not the deal closes.

2.Permitted RecipientsMedium

Recipient may disclose Confidential Information to its officers, employees, lenders, accountants and legal counsel who have a need to know for the purpose of evaluating the Transaction, provided Recipient informs them of this Agreement and remains responsible for any breach by them.

A blanket no-disclosure clause gets ignored

The buyer’s lender and accountant have to see the numbers or there is no deal. A clause forbidding all disclosure is not protection — it is a clause everyone breaches on day one. Naming the categories and making the Recipient responsible for them is stronger than a prohibition nobody can honour.

3.Non-SolicitationStrong

For 2 years following the date of this Agreement, Recipient shall not directly or indirectly solicit for employment any employee of the Business with whom Recipient had contact. A general advertisement not targeted at such persons is not a solicitation.

The clause with real teeth — and the one most often left out

Confidentiality stops a buyer repeating what they read. It does nothing to stop them hiring the operations manager they met during diligence. A seller who signs an NDA with no non-solicit has protected the information and left the people exposed. This is the provision to insist on.

4.Return or DestructionStrong

Upon written request, Recipient shall promptly return or destroy all Confidential Information and confirm destruction in writing, except for copies retained in routine backup systems or as required by law or professional record-keeping obligations.

Accept the backup carve-out

Every buyer’s counsel asks for it, and refusing it costs goodwill for no benefit — nobody restores a backup tape to steal a customer list. Keep the written confirmation requirement instead: that is the part with practical value.

5.TermMedium

The obligations in this Agreement continue for 3 years from the date above, except that obligations with respect to trade secrets continue for as long as the information remains a trade secret under applicable law.

Longer is not better

Courts trim unreasonable periods, and some strike them entirely rather than rewrite them. Two to five years is standard for a business sale. The trade secret carve-out is how you protect the genuinely sensitive material beyond the term without asking for ten years across the board.

6.No Obligation to ProceedStrong

Nothing in this Agreement obliges either party to proceed with the Transaction or to negotiate exclusively. No agreement to sell or purchase arises unless and until a definitive written agreement is executed by both parties.

7.RemediesWeak

Recipient acknowledges that a breach may cause irreparable harm for which monetary damages are inadequate, and that Discloser may seek injunctive relief in addition to any other remedy available at law.

Standard, and weaker than it reads

A judge decides whether harm is irreparable, regardless of what the parties agreed. This clause is worth including — it costs nothing and signals seriousness — but do not rely on it as your protection. The non-solicit is what a court will actually enforce.

8.Governing LawMedium

This Agreement is governed by the laws of state, without regard to its conflict of laws principles.

This choice affects the non-solicit

States differ sharply on restrictive covenants. California is hostile to them; most others enforce reasonable ones. If the buyer is in a different state and pushes for their law to govern, that is not a formality — it may decide whether clause 3 is enforceable at all.

Discloser (Seller)

—

Recipient (Buyer)

—