Glossary
NDA — Non-Disclosure Agreement
On this page5 sections
What it is
An NDA is a contract in which you agree to keep what you learn to yourself, and to use it only to evaluate the deal. It's typically the first document signed before the seller releases anything beyond a blind summary.
Why sellers require it
- Protects customer relationships. A seller doesn't want a buyer to walk away from the deal and then poach customers using information learned during diligence.
- Protects employees. Employees who learn the business is for sale may leave — and a buyer who walks away shouldn't be able to recruit them.
- Protects competitive position. Financials, pricing, supplier terms, and customer concentration are competitively sensitive.
- Protects the sale itself. If customers, employees, or suppliers learn the business is for sale prematurely, they may pre-emptively leave — destroying the value the buyer is trying to acquire.
What a typical NDA covers
- Definition of "confidential information" (typically: financial statements, customer lists, supplier terms, pricing, employee information, business identity).
- Permitted use (evaluating the potential acquisition only).
- Prohibition on disclosure to third parties (with limited exceptions for the buyer's attorney, CPA, and lender — who must sign their own NDAs).
- Prohibition on soliciting employees or customers for a defined period. The length is negotiated, and its enforceability is a question for counsel rather than a given.
- Return or destruction of confidential information if the deal doesn't close.
- Term of the confidentiality obligation. Negotiated, and worth reading against what you are actually being shown — a longer term costs you nothing if the information is genuinely confidential, and constrains you if it is not.
- Remedies for breach (injunctive relief, damages).
Hedgestone's NDA-gated listings
Hedgestone maintains an active inventory of 500+ active New York opportunities. Most are confidential and off-market. Those sellers asked us to vet buyers first — before we release financials, the location, or even the name of the business. That's why the first step to seeing them is a free 20-minute call to confirm you're a serious, qualified buyer — not a competitor, a broker fishing for inventory, or a window-shopper. The NDA process protects the sellers and qualifies the buyers.
New York-specific notes
- NDA enforceability in NYS is generally strong but subject to reasonableness — the duration, scope, and geographic limitation must be reasonable.
- NYS limits non-compete clauses for certain professions (notably physicians); the non-solicitation clause in an NDA is typically enforceable where a non-compete might not be.
- For licensed NYS businesses (food service, alcohol, childcare, healthcare), the buyer's qualification to hold the relevant license is sometimes a condition of releasing confidential information — verify the broker's vetting process.
Frequently asked questions
Why do I have to sign an NDA before seeing anything?
Because the sale is usually confidential. Staff, customers and competitors typically do not know the business is for sale, and a leak can damage it. The NDA is what lets a seller release financials, the location, and often even the name.
What am I actually agreeing to?
To keep what you learn confidential and to use it only to evaluate the acquisition. Most also restrict contacting employees, customers or suppliers directly. Read that clause specifically, because it shapes how you can run diligence later.
Should I have a lawyer review it?
For a standard one-page mutual NDA, usually not. Look closely if it runs long, if the term is unusually lengthy, if it includes a non-compete or non-solicit that binds you beyond this deal, or if it names a jurisdiction inconvenient to you.
Educational only — not legal, tax, lending, or investment advice. Confirm specific rules, rates, and forms with the relevant New York State agency, attorney, CPA, lender, or insurer before acting. See the editorial policy and methodology for how sourcing and review work.