Glossary · Deal documents
Non-disclosure agreement
Also called NDA, confidentiality agreement
Definition
A non-disclosure agreement (NDA) is a contract in which one party promises to keep the other's information confidential and to use it only for an agreed purpose, such as evaluating a deal. In a sale process, buyers sign one before they get the information memorandum or access to the data room.
Where non-disclosure agreement comes up
On this site, in our guides and in the conversations we've written up.
Video · Visible What a pre-seed fund needs in your data room before it wires the money No VC will sign an NDA to see a data room; if you do not trust an investor, Yin says to end the process altogether. 
Video · New Ventures BC Startup fundraising: what investors check and what goes in the data room Steinley's data room starts with a hyperlinked index and an overview of about 10 pages, and holds the most sensitive material back until an NDA is signed. Related terms
Teaser A one or two page summary of a business for sale, often anonymous, sent to possible buyers before they sign an NDA. Letter of intent A mostly non-binding document that sets out the main terms of a deal before the final contract is negotiated. Clean team A small, ring-fenced group allowed to see a competitor's sensitive data during a deal, under strict rules. Asset purchase agreement The contract for buying selected assets and liabilities of a business, instead of its shares. Change of control clause A contract term that lets the other party end or renegotiate the contract if the company is sold. Confidential information memorandum The detailed sales document a seller's adviser sends to buyers after they sign an NDA. Disclosure letter The seller's list of known exceptions to its warranties, which limits what the buyer can later claim for. Indemnity A promise to repay a specific loss in full, often used for known risks found in due diligence.