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What is a CA and why have I been asked to sign one?

What is a CA and why have I been asked to sign one?

What is a CA & Why do I have to sign one by Interbiz Business Brokers
What is a CA & Why do I have to sign one by Interbiz Business Brokers

What is a CA and why have I been asked to sign one?

What is a Confidentiality Agreement?

A Confidentiality Agreement (also often referred to as a NDA – Non-Disclosure Agreement) is a legal document that a Buyer signs or completes Online under the Electronic Transactions (QLD) Act 2001.  

The contents of an Interbiz Business Broker’s Confidentiality Agreement include conditions under which information about a business will be provided to a Buyer.

The buyer will undertake to be legally bound by those terms and conditions under which information about a business is disclosed.

A Confidentiality Agreement will typically include restrictions as to what a Buyer can and cannot do with the information provided. For example, a Buyer will be required to keep the information strictly confidential and will not be allowed to discuss the details of the business with anyone.

A Buyer will be precluded from contacting the staff of the business. They will be prohibited from contacting the clients, customers and suppliers of the business whilst investigating the possible purchase of the business, as this may have a detrimental effect on the Seller’s business.

Who can a Buyer talk to then?

The information provided to a Buyer by Interbiz Business Brokers can be shared with both financial advisors (banks, accountants) and legal advisors. This is permitted, as it falls under the title of Due Diligence (see separate articles on Due Diligence on our website).

What will happen if a Buyer does not abide by the terms and conditions of the Confidentiality Agreement?

 A Buyer is legally bound by the terms and conditions of the Confidentiality Agreement and must comply with it. Failure to do so may result in the Seller taking legal action against the Buyer, if it can be proven that they suffered a loss due to a negligent use of the information provided.

A typical example of a breach of the Confidentiality Agreement could be a Buyer speaking to the staff who were not aware of the business was on the market for sale and decide to seek alternative employment leaving the Seller without staff.

Another breach could be discussing the financial information of the business with a competitor or supplier, thereby having a detrimental effect on the trading performance of the Seller’s business.

Use Empathy

Put yourself in the position of the Seller. How would you like others to handle the information if it was your business?

A quick check to see if you comply with the terms and conditions is to ask yourself a simple question; “will my actions possibly be detrimental to the Seller’s business?”

Seek legal advice!

A Buyer is legally bound by the terms and conditions of the Confidentiality Agreement and must comply with it. Failure to do so may result in the Seller taking legal action against the Buyer, if it can be proven that they suffered a loss due to a negligent use of the information provided.

All articles provided on this website are for informational purposes and not to be construed as financial or legal advice. Consult you accounting & legal team for advice in selling or buying a business.