Non-Disclosure Agreements for Mergers and Acquisitions

nat rosasco • September 5, 2018

In almost every merger and acquisition (M&A) transaction the buyer and seller need to share certain confidential information to evaluate the merits of and negotiate the terms of the potential deal (such as financial information, material contracts and customer information). The path to providing information safely is making sure the other party is bound to respect the confidential nature of the information and not use such information in a way that causes harm to the disclosing party.



Using a Non-Disclosure Agreement is a common way to protect your company’s sensitive information when it is shared with another party. These agreements are also known as “Confidentiality Agreements” or, as it will be referred to here, an “NDA”. Unfortunately, no document is going to guarantee that an unethical person won’t use shared confidential information in a nefarious manner, however, an NDA will certainly reduce the risk of a potential buyer disclosing sensitive information about your business or using that information in some competitive manner. If they do, then at a minimum you as the seller have a legal cause of action against them and most sophisticated buyers, and even competitors, won’t take that risk.

While there are many details of an NDA that bear scrutiny, our focus in this post is determining exactly what is considered confidential information.


What is Considered Confidential?

The definition of “Confidential Information” in the context of an NDA is generally described in very broad terms and can vary from one NDA to the next. There is of course a natural divergence of interests between buyers and sellers in defining Confidential Information, as sellers want as broad a definition as possible to protect their business and buyers want to narrow the definition. A compromise that most buyers and seller’s reach is a very broad definition of Confidential Information with certain exceptions, typically including: (1) any information that is already known to the public at the time that it is communicated to the potential buyer, (2) information that becomes publicly known after the seller discloses it to the potential buyer (other than through the fault of the potential buyer or its representatives) or (3) information that is required to be disclosed by law or a court of competent jurisdiction.

So what exactly is considered confidential? Here are some practical examples of information and documentation that would typically be protected under an NDA:

·     Financial and statistical data

·     Computer programs and other software

·     Sales, customer and client information

·     Business methodologies

·     Patentable and unpatentable inventions, discoveries, know-how, works of authorship and    trade secrets

·     Techniques, strategies, plans and tactics

·    Samples, test results and other test data

·     Prototypes, drawings, computations, processes and data

·     Information related to the current, future and proposed products and services of the company, including any research, experimental work, development, design details, specifications, samples, designs and models

·    Employee information


In addition to protecting the confidential information of a business, an NDA should also prohibit a potential buyer from disclosing information about the potential transaction. In particular, the buyer should not be permitted to disclose to third parties any of the terms, conditions or other facts related to the negotiations between the parties. The NDA should also provide that a buyer is only permitted to use the seller’s confidential information for purposes of evaluating the potential transaction and disclosure should be limited only to such buyer’s advisors.


A sophisticated buyer will understand the need to execute an NDA that prevents the buyer from using or disclosing the seller’s confidential information. This confidential information is a very valuable asset of the seller’s business, and, while the buyer needs to evaluate such information, it is critical that this information is not disclosed by the buyer to third parties or used by the buyer for any purpose other than evaluating the seller’s business in connection with a potential transaction.


The following is a sample clause defining “Confidential Information” in an NDA:

As used in this Agreement, the term "Confidential Information" means and includes any and all information, techniques, plans, designs, costs, pricing, finances, research and development activities, Supplier specifications, supplier lists, business opportunities, personnel, and/or data disclosed by a party (the "Disclosing Party") to the other party (the "Receiving Party") before, on, or after the date hereof which relates in any manner, directly or indirectly, to the Disclosing Party and/or its customers, suppliers and Customers, whether such information is disclosed in writing, verbally, electronically, or otherwise, and which information the Disclosing Party maintains as confidential. Notwithstanding the foregoing, information and/or data shall not be considered Confidential Information if such information and/or data is: (i) established by the Receiving Party to have been known by it at the time of receipt, (ii) or becomes a part of the public domain through no direct or indirect act or omission of the Receiving Party, or (iii) received by the Receiving Party from a third party without similar restrictions, (iv) is independently developed by the Receiving Party without using any Confidential Information of the Disclosing Party, or (v) is approved for release by the Disclosing Party in writing and is released consistent with such approval.


If you need assistance preparing an NDA, or have questions about purchasing or selling a business, the attorneys at Grogan Hesse & Uditsky, P.C. are here to help. Visit us at www.ghulaw.com for more information.

Employers Can Require COVID-19 Vaccinations For Most Employees

By nat rosasco • February 25, 2021
As this relentlessly awful year mercifully draws to a close, a light at the end of our pandemic tunnel is rapidly approaching. COVID-19 vaccines are poised for approval, and it is expected that distribution will begin in earnest shortly. But no matter how much and how confidently the FDA and other health experts proclaim these vaccines to be safe and effective, there are large numbers of Americans who say they won’t get the shot when it becomes available. The most recent Gallup poll found that only 63 percent of Americans say they are willing to be inoculated against the disease. Many of those who don’t want to get vaccinated will soon find out that they work for an employer who feels differently. Those employers may also tell them that they either need to get the vaccine or need to find a new job. And, in most cases, employers may be well within their rights to terminate employees who refuse to take the COVID-19 vaccine. Mandatory Vaccinations Are Not New Companies that have spent the better part of the year – and lots of money - trying to keep their workplaces COVID-free see the vaccine as the apex of those efforts. With a fully vaccinated workforce, business owners can operate without disruption and provide employees, customers, clients, and patients with confidence and peace of mind. But all of those benefits of the vaccine only accrue to fully vaccinated workforces. So, many companies may mandate that employees get their shot as a condition of continued employment. By doing so, they are following a legally sound path that predates the current pandemic. Well before anyone had heard of coronavirus, plenty of employers, primarily in the health care sector, required employees to get the flu vaccine and vaccinations against other infectious diseases. Most public school districts also require proof of vaccinations before a student can enroll and attend classes. Since most employees in Illinois work on an “at-will” basis, they can face termination for almost any reason not expressly prohibited by federal, state, or local laws. Generally, no law stands in the way of an employer requiring the COVID-19 vaccine for its workers. ADA and Religious Exceptions However, employers who make vaccines mandatory need to be mindful that employees with legitimate health or religious concerns about the vaccine may be protected from termination and other adverse employment actions if they refuse the shot. But these exceptions don’t necessarily apply just because someone doesn’t believe in vaccines generally (“anti-vaxers”) or thinks that forcing them to get vaccination is an infringement on their liberties. Employees who have a disability recognized under the Americans with Disabilities Act (ADA) that prevents them from taking the coronavirus vaccine cannot be forced to get the vaccine, so long as their exemption does not impose an “undue hardship” on the employer. Such disabilities in this context may include a compromised immune system or an allergy to an ingredient in the vaccine. While there has been no definitive guidance on the subject, one could credibly argue that an employee’s refusal to get vaccinated is an “undue hardship” if it places the health and safety of other employees and visitors at increase risk of infection. Even in such cases, however, an employer may need to make a “reasonable accommodation” for the employee, such as allowing them to work from home. Similarly, the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 may protect a worker if their “sincerely-held religious beliefs” preclude them from getting a vaccination. Such beliefs do not include political or personal views. The burden is on the employee to demonstrate the legitimacy of their religious objections to the vaccine. More Than Legal Issues To Consider Even when an employer is within their legal rights to require employees to get the COVID-19 vaccine, other considerations may weigh against such a mandate. For example, they may need protection against an employee who has an adverse reaction, even if they signed a waiver upon receiving the shot. A vaccination requirement may also get an adverse reaction from employees generally as well as the general public if it seems heavy-handed and overreaching. Of course, those that decide against a mandate face risks if someone does contract the coronavirus in the workplace and sues. Please Contact Grogan Hesse & Uditsky With All Of Your COVID-Related Employment Questions If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.

Are You Eligible for the Second Round of PPP Loan Forgiveness?

By nat rosasco • January 11, 2021
The Paycheck Protection Program (PPP) is back , offering a second round of loan forgiveness to new borrowers and qualified second-time PPP borrowers. The second round of PPP loans has earmarked up to $284 billion to support business owners' payroll costs and other eligible expenses through March 31, 2021. Loans will be available to first-time participants on Monday, January 11, and existing PPP participants on Wednesday, January 13. First Draw PPP Loan Eligibility Borrowers that did not participate in the first round are generally eligible for a First Draw PPP Loan if they were in operation on February 15, 2020, and fall into one of the following categories: Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans. Eligible self-employed individuals (including sole proprietors and independent contractors). Non-profit organizations, including churches. Accommodation and food services operations with no more than 500 employees per location. Sec. 501(c)(6) business leagues with no more than 300 employees that do not receive more than 15% of its income from lobbying. Qualifying news organizations with 500 or fewer employees per location. Second Draw PPP Loan Eligibility Existing PPP participants are generally eligible for a Second Draw PPP Loan if the borrower: Used or will have used its First Draw PPP Loan as authorized. Has no more than 300 employees. Can prove it has suffered at least a 25% reduction in gross income between the same quarters in 2019 and 2020. Our team is committed to monitoring new developments with the PPP and providing you with the information you need. It is essential that your small business consults with knowledgeable corporate attorneys , financial advisors, and accountants on your PPP eligibility and forgiveness applications. If you have any questions about the new eligibility requirements or any other issues involving the PPP, please feel free to call or email us.

Amendments to PPP Loan Forgiveness

By nat rosasco • June 5, 2020
Many businesses that received Paycheck Protection Program (“PPP”) funds are coming to the end of their respective eight-week time periods (“Expenditure Period”) during which they must use the PPP funds to obtain forgiveness under the CARES Act. Unfortunately, many of these businesses have found it difficult to reopen and remain fully operational throughout the Expenditure Period and consequently to meet spending thresholds necessary to obtain full forgiveness. Luckily for these businesses, some much needed flexibility is on its way. Paycheck Protection Program Flexibility Act On June 5th, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA made the following changes relevant to PPP loan forgiveness: Extends the Expenditure Period from eight weeks to the earlier of twenty-four weeks from the date of the loan origination or December 31, 2020. Reduces the required payroll spending amount to a minimum of 60% on payroll instead of the current 75% minimum requirement. This would allow businesses to use the remaining 40% of the PPP funds on rent and other operational items as needed. Extends the deadline for workers to be able to be rehired to December 31, 2020 instead of the current cutoff of June 30, 2020. Extends the PPP loan to a five-year term instead of the current two-year term. As any amendments governing the use and repayment of PPP loans may be vital to a small business’ ability to continue to operate and successfully plan for the future, our team will continue to keep you up to date on the on-going developments. As always, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to use your PPP funds. Should you have any questions, don’t hesitate to call or email us.
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