4 Situations When You Need a Nondisclosure Agreement

If you are running a business, you need to make sure you are able to maintain every possible market advantage possible. For many businesses, the most important thing is to keep your products, technologies, strategies, and other ideas private so competitors can’t use them. One of the most effective ways to do this is to use non-disclosure agreements whenever appropriate. These agreements will allow you to share private information without the risk of that person using it themselves or sharing it with others who should not have it.

When Employees are Given Access to Confidential or Proprietary Information

Employees often have to have access to confidential or proprietary information in order to do their jobs. If they do not sign a nondisclosure agreement, they could be recruited away from your company by a competitor, and then use some or even all of their knowledge to benefit that company and therefore hurt your business. Another risk is that the employee will take the confidential information they learned working for you and start their own business in direct competition.

Presenting Offers to Potential Investors or Partners

If you need additional capital to run or grow your business, you may need to bring on investors or even partners. In order to put up their money, these potential investors or partners will want to know everything possible about your products, services, and other business information. If they do invest, they obviously won’t want to do anything to hurt the company. If they don’t, however, they could take that information learned and use it for their own benefit. Either way, it is best to have them sign a nondisclosure agreement to ensure you are protected. This will also show the potential investors that you protect your business, which will make them more willing to buy in.

When Negotiating the Sale or Licensing of Products or Technologies

Selling or licensing the rights to your products or technologies is a great way to make money for a business. When negotiating with another party for the rights to your products, however, you need to make sure you are protected. If you don’t have a nondisclosure agreement in place, there is little that could be done to stop them from using what they learned to simply build their own products or technologies.

When Discussing Business Information with Possible Buyer

If you are thinking about selling your business, you will want to keep it quiet as long as possible. Selling a business makes sense in many situations, but when it happens it can cause employees to want to leave, customers to start looking elsewhere, and much more. If you are in discussions with a potential buyer, make sure the nondisclosure agreement not only applies to the details of your products or technologies, but also to the very fact that you are thinking about selling.

The Agreement Must be Properly Written

A “one size fits all” nondisclosure agreement isn’t typically going to be sufficient to protect your business. Instead, you will need one that is tailored to the exact situation for which it will be used. If you need one of these agreements, or you have any questions about them, please contact Lexero Law Firm to set up a consultation today.

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