Tag Archives: negotiating

NDAs and 5 tips for getting them signed

When I was a pimply faced lad and just received my commission to be an Army Officer, I had my new boss, a senior Armoured Corps Officer held up to me as the example I should emulate. It wasn’t because he was a particularly great leader or a great soldier though, it was because he thought through all possible outcomes and developed strategies to cope with them.

NDAs non-Disclosure AgreementsA really good example of his style was at a training course that he went on. All attendees at the course were set a task of developing a battle plan that could either have an Infantry bias or an Armoured Corps bias. The twist in the tail was that the assessors were an old Infantry officer and an old Armoured Corps officer, but you didn’t know who you were going to get. So:

  • Some people on the course wrote a battle plan that was a compromise between the Armoured solution and the Infantry solution. They hedged their bets.
  • Some people on the course wrote a battle plan that was clearly biased to Infantry, and some to the Armoured Corps. They hoped they would get the “right” assessor.
  • My guy however wrote two complete battle plans, one for each bias. He then held them both behind his back and handed over the plan with the correct bias, when he found out who his assessor was to be.

I was reminded of this the other day when I was having a drink/discussion about the use of NDAs or Non-Disclosure Agreements with a lawyer and a merchant banker. During the course of the conversation, a number of interesting points came out around their experiences, which I thought I might share.

1. How long should NDAs last for?

In Australia we tend to say “until the information is in the public domain”, however in the USA it tends to be for a time period “3-6-12 months?”. So consider how long the information needs to remain secret for, as it becomes much easier to get it signed if its only for a short period (especially if the other party is a potential investor and may be looking at many technologies in the same area).

2. Are their layers of Information the NDAs cover?

Information can be presented in layers, and NDAs uncover the layers. So you have an abstract overview that perhaps anyone can look at. An NDA that allows deeper access, and another NDA that allows secrets to be reviewed, but needs a “lets get serious” non refundable deposit to be executed.

3. How do NDAs fit with other documentation?

A presentation that has parts blanked out is sure to whet the appetite. A handy NDA can allow your audience to then see the version of the power point without the blanked out bits.

4. How many NDAs should you have?

There is more that one type of investor, generally strategic (smart money) or cash only (dumb money), and these people will need different information before they get on board. Perhaps you are even talking to a potential investor that has investments in competitors? You need to understand, the attributes of what you have to hide plus the needs of the audience. Thinking like this means that you will end up with more than one NDA.

5. Understand each and every clause of your NDAs

In every negotiation you are likely to compromise or give things away so that you can ink the deal. The NDA is no different, perhaps to get it signed, you need to drop some clauses. You need to understand what you are prepared to run a line though before you sit at the table.

The Army Officer that was held up to me as the guy I should emulate, wasted an awful lot of time worrying about things that never came off. The upside of this was that everything he ever did was successful.

So do you just use one standard NDA that your legal guy wrote?