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Regulatory: The unintended consequences of due diligence nondisclosure agreements

Due diligence agreements can limit a potential buyer’s business long after the parties have parted ways

Transactional due diligence is almost always preceded by execution of a nondisclosure agreement (NDA) to protect trade secrets and confidential business information revealed to the potential buyer. Such agreements may be viewed as routine boilerplate—so uncontroversial that they are signed without even review from the legal team. However, due diligence agreements often restrict a potential buyer’s business long after the parties have gone their separate ways. While some restrictions are fair and reasonable, others can be burdensome and leave the potential buyer regretting its failure to think twice before signing the agreement.

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Linda Stevens

Linda Stevens is a partner in the Chicago office of Schiff Hardin, LLP and co-chair of the firm’s Trade Secrets Client Services Team.

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Matthew Prewitt

Matthew Prewitt is a partner in the Chicago office of Schiff Hardin, where he concentrates in complex litigation and also co-chairs the firm's Trade Secrets Client Services...

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