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skills/nda-review/examples/example_mutual.md

Worked Example — Mutual Perspective, Early-Stage M&A NDA

This example shows the skill applied to a mutual NDA in an early-stage acquisition discussion. The skill is calibrated to the user's mutual perspective, which means asymmetry analysis is the dominant lens — both parties are exchanging information and the user wants the document to actually be balanced, not just labeled mutual.

Input

Perspective: mutual Deal type: ma_diligence Jurisdiction: Delaware (governing law) Prior agreements: none

Document (excerpts):

MUTUAL CONFIDENTIALITY AGREEMENT

1. Definitions. "Confidential Information" of a Disclosing Party means non-public information disclosed by such party to the other party (the "Receiving Party"), whether disclosed orally, in writing, electronically, or by inspection of tangible items, and identified at the time of disclosure as confidential or that a reasonable person would understand to be confidential under the circumstances. Confidential Information includes, without limitation, business plans, financial information, customer information, product roadmaps, technical information, and the existence and contents of any negotiations between the parties.

2. Purpose. The parties wish to explore a possible business transaction (the "Purpose"). Each party will use Confidential Information of the other only for the Purpose.

3. Exclusions. Confidential Information does not include information that the Receiving Party can demonstrate: (a) was in the public domain prior to disclosure; (b) becomes publicly available after disclosure through no breach by Receiving Party; (c) was known to Receiving Party prior to disclosure without obligation of confidentiality; (d) is independently developed by Receiving Party without use of or reference to Confidential Information; or (e) is rightfully received by Receiving Party from a third party without obligation of confidentiality.

4. Permitted Disclosures. Receiving Party may disclose Confidential Information to its directors, officers, employees, affiliates, and Representatives (defined below) who have a need to know for the Purpose and who are bound by obligations of confidentiality at least as protective as those herein. "Representatives" means a party's outside legal, accounting, financial, and other professional advisors. Receiving Party shall be responsible for any breach by its Representatives.

5. Compelled Disclosure. If Receiving Party is required by legal process to disclose Confidential Information, Receiving Party shall, to the extent legally permitted, promptly notify Disclosing Party and reasonably cooperate in any effort by Disclosing Party to obtain a protective order or other appropriate remedy.

6. Term. This Agreement shall remain in effect for two (2) years from the Effective Date. Each party's confidentiality obligations shall survive for two (2) years from the date of disclosure of the relevant Confidential Information.

7. Return or Destruction. Upon written request of Disclosing Party or upon termination of this Agreement, Receiving Party shall, at its option, return or destroy all Confidential Information of Disclosing Party, except that Receiving Party may retain (i) one archival copy in its legal and compliance files and (ii) copies on standard backup systems pursuant to ordinary backup retention policies, in each case subject to continuing confidentiality obligations.

8. No License; No Other Agreement. No license is granted under any patent, copyright, trademark, trade secret, or other intellectual property right by reason of this Agreement. Neither this Agreement nor any disclosure of Confidential Information obligates either party to enter into any further agreement or transaction.

9. Standstill. For a period of twelve (12) months following the Effective Date, neither party nor its Representatives shall, without the prior written consent of the other party, (a) acquire or offer to acquire any securities or material assets of the other party; (b) propose any merger, business combination, or similar transaction involving the other party; (c) solicit proxies or consents from the other party's stockholders; or (d) form any "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 with respect to the other party's securities.

10. Non-Solicitation. For a period of twelve (12) months following the Effective Date, neither party shall solicit for employment any employee of the other party with whom such party had material contact in connection with this Agreement; provided, however, that general solicitations not directed at the other party's employees shall not be deemed a breach.

11. Equitable Relief. Each party acknowledges that any breach of this Agreement may cause irreparable harm to the other party for which monetary damages would be inadequate. Each party shall be entitled to seek injunctive relief and specific performance, in addition to any other remedies available at law or in equity, without the requirement of posting bond.

12. Governing Law. This Agreement shall be governed by the laws of the State of Delaware. The parties consent to exclusive jurisdiction in the state and federal courts of New Castle County, Delaware.

13. Miscellaneous. This Agreement constitutes the entire agreement of the parties regarding its subject matter, supersedes all prior negotiations and agreements regarding the same subject, and may be amended only in writing signed by both parties. This Agreement may be executed in counterparts and via electronic signature.

Output

NDA Review: Mutual Confidentiality Agreement (M&A Diligence)

Perspective: mutual Document type: Mutual NDA (genuinely mutual on review of operative provisions) Governing law: Delaware Term: 2 years; confidentiality survives 2 years from disclosure

Bottom line

This is a well-drafted M&A diligence NDA that is genuinely mutual in operative effect, not just label. There are no critical issues. Two material items warrant the user's deliberate business judgment: the standstill provision (§9) and the 2-year confidentiality term (relatively short for M&A-grade information). The document is signable with the user's deliberate decision on these two items; minor cleanups are optional.

Critical issues

None.

Material issues

Standstill provision (§9)

What the document says: 12-month standstill prohibiting acquisition activity, business-combination proposals, proxy solicitation, or 13(d) group formation without prior written consent.

Why it warrants the user's judgment: Standstill provisions are common in M&A diligence NDAs and serve a legitimate purpose (preventing the recipient of diligence information from using that information to launch a hostile bid). However, they bind both parties from acquisition activity for the standstill period — which is meaningful for the user, who is contemplating an acquisition.

The provision as drafted has reasonable boundaries:

  • 12-month duration is standard.
  • Limited to acquisition-related activity, not general business activity.
  • "Don't ask, don't waive" provision is not present (i.e., user can request consent and the other party can decline; user may also publicly announce a request, depending on Delaware case law evolution).

Considerations for the user's decision:

  • If the user is the only realistic acquirer (other than possibly competitors who would also be bound by similar NDAs), the standstill is acceptable.
  • If the user might walk away from this discussion and want to revisit on different terms within 12 months, the standstill closes that path absent counterparty consent.
  • If competitors are also being approached and might sign similar NDAs with similar standstills, all potential acquirers will be similarly bound — leveling the field.
  • If the user wants the option to launch a hostile or non-friendly approach later, the standstill prevents that during the 12-month period.

Suggested redline (optional): No change required if the user accepts the standstill in concept. If the user wants flexibility, consider adding a "fall-away" provision: "The restrictions in this Section 9 shall terminate immediately upon: (i) Disclosing Party's public announcement of a transaction with a third party; (ii) any third party commencing a tender offer for Disclosing Party's securities; or (iii) Disclosing Party's board recommending in favor of any such transaction." This converts the standstill from absolute to deal-protection — recipient can re-engage if a different transaction emerges.

2-year confidentiality term (§6)

What the document says: Confidentiality obligations survive 2 years from date of disclosure of the relevant information.

Why it warrants the user's judgment: For most commercial NDAs, 2 years is on the shorter end of standard. For M&A diligence specifically, 2 years is on the shorter side and may not adequately protect either party's strategic information. Considerations:

  • Trade secrets: the term should be longer for trade secrets specifically (typically "for as long as the information remains a trade secret"). Current document does not distinguish.
  • Customer information: post-deal, customer information that was disclosed in diligence retains commercial sensitivity well beyond 2 years.
  • Product roadmap: product roadmap information has typical commercial sensitivity of 12-24 months from disclosure, so 2 years may be approximately right for this category.

Suggested redline: Modify §6 to: "This Agreement shall remain in effect for two (2) years from the Effective Date. Each party's confidentiality obligations shall survive for three (3) years from the date of disclosure of the relevant Confidential Information; provided, however, that with respect to any Confidential Information that constitutes a trade secret under applicable law, such obligations shall survive for so long as such information continues to qualify as a trade secret."

This modification benefits both parties symmetrically (this is mutual diligence), so it should be a clean negotiation point.

Minor issues and observations

  • Definition of "Confidential Information" includes existence and contents of negotiations (§1). Standard for M&A NDAs and appropriate. Minor flag for user awareness — public statements about the discussions, even at a high level, may breach.
  • Non-solicitation (§10) is reasonably scoped: 12 months, only employees with material contact, general-solicitation carve-out. Acceptable.
  • Mutual equitable-relief provision (§11) runs symmetrically. Good.
  • No publicity/announcement provision. Some M&A NDAs include explicit press-release / public-announcement restrictions beyond the implicit restriction in the definition of Confidential Information. Not adding one here is fine but worth user awareness — if a deal is announced, the parties will likely need to coordinate messaging through a separate press-release-coordination provision in the definitive agreement.
  • No specific notice provision. The Miscellaneous section (§13) doesn't specify how notices are delivered. For an M&A NDA, formal notice mechanisms matter (e.g., notice to terminate, notice of breach). Consider adding a notice provision specifying email and address-based notice procedures.
  • "Material contact" in non-solicitation is undefined. Reasonable in context but could be a future ambiguity.

Missing standard protections

  • Compelled-disclosure provision (§5) is present and well-drafted; no addition needed.
  • No-license language (§8) is present; no addition needed.
  • Standard exclusions (§3) are complete — all five categories covered.
  • Equitable relief (§11) is present and mutual.
  • The document is largely complete on standard provisions. The only standard protection worth adding is a notice provision (see Minor issues above).

Operational red flags

None. The document is appropriately scoped to confidentiality plus standard M&A-NDA companion provisions (standstill, non-solicitation). No indemnification, no IP assignment, no asymmetric remedies.

  1. Sign with the suggested term modification (§6). Adding the trade-secret carve-out is a clean improvement that benefits both parties. The other party should accept without controversy.
  2. Make a deliberate decision on the standstill provision (§9). Consider whether a fall-away clause is worth requesting. The decision is business-strategic, not legal — the user knows whether they want optionality on hostile approaches.
  3. Optional: add notice provision. Minor cleanup; not blocking.

Items requiring human judgment

  • Whether to negotiate the standstill or accept as drafted. This is a strategic call about the user's transaction plans and competitive positioning, which the skill cannot assess.
  • Whether the 2-year term is acceptable for this specific deal. Depends on the sensitivity of the information that will be exchanged in diligence — only the user knows what specifically will be shared.
  • Whether other process-protective provisions belong in this document or in a subsequent diligence-specific agreement. Some M&A NDAs are followed by a more detailed Confidentiality and Standstill Agreement once the parties move past initial discussions.

End of example output.

What this example demonstrates

  • Severity calibration to a clean document. No critical issues, two material issues, several minor observations. The skill does not invent severity to fill report sections — when a document is good, the report is short.
  • Mutual perspective in action. Asymmetry analysis is the dominant lens; the report explicitly notes when provisions run symmetrically (good) and where they need to be made symmetric (suggested redlines benefit both parties).
  • M&A-specific considerations surfaced. Standstill, "existence of negotiations" in definition, fall-away clauses — all topics specific to M&A NDAs that a generic commercial-NDA review would miss.
  • Material issues framed as judgment calls, not problems. The standstill is not "wrong"; it warrants user judgment about the user's strategic situation. Severity reflects "this needs deliberate decision," not "this is bad."
  • "Items requiring human judgment" used to defer business calls to the user. The skill provides the legal frame; the user makes the business decision.
  • The bottom line opens with the recommendation. "Signable with the user's deliberate decision on two items" — clear, immediate, actionable.