Non-Disclosure Agreement (NDA)
A legally binding contract preventing parties from sharing confidential information exchanged during business dealings.
What is NDA?
A non-disclosure agreement (NDA), also called a confidentiality agreement, is a legally binding contract between two or more parties that prohibits the disclosure of specified confidential or proprietary information shared during business negotiations, employment relationships, partnerships, or due diligence processes. NDAs can be mutual (both parties agree not to disclose each other's information) or one-directional. In corporate governance, NDAs are routinely used in M&A due diligence, executive hiring, and when sharing sensitive financial data with potential investors. Breach of an NDA can result in injunctive relief to prevent further disclosure and monetary damages for harm caused.
Example
During Microsoft's acquisition of Activision Blizzard (announced 2022, completed October 2023), both companies and their advisors operated under comprehensive NDAs governing the flow of confidential financial projections, game pipeline data, employee information, and contract details. The NDAs remained in force through the 21-month regulatory review process.