The non disclosure agreement is the only protection a seller has between disclosing the business and closing the deal. The standard form most brokers use protects the information; it frequently does nothing about the two things that actually damage a seller, which are staff poaching and customer approaches.
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The four clauses
Confidentiality of the information and of the fact that the business is for sale. A non solicitation of your employees and customers for a defined period, which is the clause most standard forms omit. Return or destruction of materials on request. And a named list of who inside the buyer's organization may see what, so the information does not circulate through a competitor's sales team.
Competitors need more
Where the buyer is a competitor, stage the disclosure: financial summaries without customer names first, detailed contracts and customer identities only after a letter of intent, and the most sensitive material to their advisers rather than to their staff. A serious buyer accepts this; one who refuses a non solicitation has told you what the approach is about.
What an NDA cannot do
It cannot unlearn what somebody has read, and enforcing it is expensive and slow. Treat it as a deterrent and a basis for a claim, not as protection. The real protection is disclosing the most damaging information last, and only when the deal is close to certain.
Questions people ask about business sale non disclosure agreement
Should I use the broker's form?
As a starting point. Add the non solicitation and the named recipient list, both of which standard forms often lack.
How long should it run?
Two to three years for confidentiality is common, with the non solicitation typically shorter. Longer periods are harder to enforce and rarely worth arguing for.
Should I ask for proof of funds too?
Yes, before releasing detailed figures. It costs a genuine buyer nothing and removes most of the traffic.