Be Careful With Your Lawyer's NDA Markup - It Is Your First Impression

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April 10, 2023

by a professional from Georgetown University in Maryland, USA

For years I represented big private equity and strategic buyers as their M&A counsel. Lesson #11 from the private equity trenches, make sure your lawyer is giving the right first impression.

If I am seller's counsel, often my first touchpoint with opposing counsel is their markup of my NDA. When I am buyer's counsel (more often) their first impression of me is my markup of their NDA.

We can all agree that while we need NDAs, this document is fairly unimportant and rarely disputed/enforced.

Yet, several times when representing a seller, I sent a middle-of-the-road NDA to the buyer's counsel and I would get back an insanely aggressive, nit-picky, and off-market NDA markup. Sometimes, the buyer was not even aware of his lawyer's markup.

I was shocked that the buyer wanted its first impression to be that they will be difficult to work with on the legal documents.

When the seller is sitting around with their lawyer evaluating offers, you better believe that his lawyer is going to speak up when it comes to that buyer that wasted hours going back and forth on a standard NDA.

Lesson #11 from the private equity trenches that applies to searchers: Make sure your lawyer's first impression is that he/she will be reasonable and easy to deal with.

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Reply by an intermediary
from Wisconsin Lutheran College in Brookfield, WI, USA
This also applies to brokered deals. If you get super aggressive with the NDA, you definitely aren't doing anything to make the broker advocate for you to the seller. Look to mitigate risk, not eliminate it. And if you aren't reviewing the redlines your attorney is making, shame on you. Remember who's the client and who's the advisor.
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Reply by a professional
from Georgetown University in Maryland, USA
So true, Mark. Some lawyers get caught up in eliminating all risk rather than understanding that there is also a risk to trying to eliminate all risk. Mitigating major risks is a much better perspective.
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