If the Nondisclosure Was a Hassle, Wait Until the Definitive Agreement

If you have trouble negotiating the nondisclosure agreement, you will have equal or greater difficulty achieving the definitive agreement(s).

When a mutual NDA was sent to my client, the other company was well-protected while the definition of my client’s confidential information was limited to pricing and financial information. Nothing protected the client’s intellectual property, including methodologies and trade secrets. The damage was done by one sentence out of several pages of nondisclosure language, and it took a couple of readings to spot.

When faced with this kind of heavy-handed dealing, the seller or service provider must Nondisclosure-impasse-means-troubleconsider the implications:

  •  The other side’s attorneys are running the show, and they are more interested in achieving dominance than in a mutually beneficial business arrangement.
  • It is not jut the attorneys – the company management believes that the negotiation must be “won”, whether the resulting business terms are fair or not.

What can you do if you find yourself in a difficult negotiation on the nondisclosure, before the definitive agreement is ever begun? Consider the following:

  • Be certain that the other party is one with which you want to do business. If the discussions are heated enough, it may be wiser to “fire” the client or strategic partner, as a workable deal is unlikely. I realize this is a difficult, rarely made decision.
  • Watch the other party very carefully. Attention needs to be paid to every negotiating point and each word in the draft agreements – much more than normal.
  • Assume getting to a workable business deal will take twice as long as usual, and plan accordingly.
  • Assign your most experienced negotiators to the task and have management kept closely informed.
  • Make sure that the nondisclosure and later agreements protect your intellectual property to a sufficient degree, or walk the deal.

Trying for a strong negotiating position in a nondisclosure is normal. If the other side goes well beyond that, you must consider if you wish to continue the negotiation.

Posted in Business Practices, Uncategorized

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