Is a confidentiality agreement the same as an NDA?

NDA stands for non-disclosure agreement. In the sources below, the terms “confidentiality agreement” and “non-disclosure agreement” are used for the same kind of document, signed before a seller shares sensitive information with a buyer. Nothing in these sources gives one name more protection than the other. What protects you is what the agreement says.

How the names are used

BDC says the letter of intent is very often preceded by a confidentiality agreement that aims to protect the information and documents belonging to both parties. In its steps for buying a business, BDC says that when a possible sale becomes more realistic, signing non-disclosure agreements will encourage frank discussions. The Canadian Intellectual Property Office lists “non-disclosure or confidentiality agreements” together as ways to protect trade secrets.

What to check in the document

Whatever the title says, read what it covers, who is bound, how long it lasts and what the buyer may do with the information. Ask whether it protects both parties, as BDC says a confidentiality agreement aims to do. Ask whether it covers the fact that the business is for sale, as well as the financials. Have a lawyer draft or review it rather than reusing a template without reading it.

Confidentiality inside a letter of intent

A separate confidentiality agreement is not the only place the duty can appear. BDC says a letter of intent is not intended to be fully binding unless otherwise expressly stipulated, but where so provided it will create binding obligations, particularly with regard to confidentiality and exclusivity. Check whether your letter of intent repeats or overrides the earlier agreement.

For what the agreement protects in practice, see what an NDA actually protects in a business sale.