Protect your people, not only your documents
In M&A, non-solicitation and non-contact terms can be critical.
In a sale process, the most damaging leak may not be a document. It may be a buyer contacting a key employee, customer, supplier, or lender before the seller is ready.
That is why a transaction NDA often needs to function partly as a non-solicitation and non-contact agreement. The buyer should not use the process to recruit employees, approach customers, disrupt vendor relationships, or investigate the company through unauthorized channels.
The scope must be drafted carefully. A large buyer may already recruit in the same labor market or serve the same customers. The agreement should distinguish ordinary-course activity from targeted conduct based on information received in the process. It should also define which representatives, portfolio companies, and financing sources are covered.
For employees, consider restrictions on direct solicitation and on hiring people first identified through the transaction, subject to appropriate exceptions for general advertisements and pre-existing discussions. For customers and suppliers, require written authorization before contact and control the timing, participants, and purpose of each conversation.
These protections matter most when the buyer is a competitor or industry participant. Even a well-intentioned contact can create rumors, distract employees, or cause a customer to reconsider a contract.
The label on the document is less important than the conduct it governs. A good M&A NDA protects information, relationships, and the stability of the business while buyers evaluate the transaction.