Knowledge is power. We know that this is true for a long time in history, but it is especially true in these times. So there is no surprise that whatever type of business we are doing today, we are concerned about how to protect the most significant of our confidential information. Can anyone have confidence in the people they hired? In people, they are partnering with on some project? That is why Non-Disclosure Agreements exist and why they are essential to all enterprises today. So what are these agreements?

They are legally binding contracts that serve the purpose of guarding our most important data. Sometimes we may hear about them as Confidential Disclosure Agreement or Confidentiality Agreement, but, no matter the name they go by, they make distributing data between two parties possible in a safe manner. Making sure that it is clear what information is not to be disclosed to anyone else is of extreme importance to circumvent any disputes. So what do all of these contracts need to have?

Well, first of all, it is of utmost importance to identify all the participants, explain the purpose of the contract, list all of the confidential information, and identify the terms of the agreement. Naturally, the topic is much more complicated than that. So if you want to understand these agreements better, simply read more here. But if you are just wondering why you might need a Non-disclosure Agreement, here are seven reasons for that.

1. Negotiating with a possible new partner or investor


It is rare and arduous that we do any type of business or project completely alone. Partners or investors are a necessity in modern business, especially if expansion is the next step. So when we negotiate with potential allies, we usually have to share some significant data about ourselves. It could be about our financials, something personal, or anything similar. No matter what it is, while you are looking for this new partner, you will have to talk to a number of them. Making sure to stay protected is a priority. After all, we are looking for a new partner so we could grow. And we will not be able to accomplish that by losing data.

2. Or maybe negotiating with a possible buyer

Maybe you need to consider a buy-out. It happens, and it is a natural part of doing modern business. But when having a meeting with potential buyers, there is a need to show everything about your company. If they feel like you are hiding something from them, they might not continue with the deal, and if you are not showing all of the good aspects of what you have, the price will only go down. But still, not everyone we meet with will be the one we end up doing business with. So once again, there is a need to stay safe. It might sound strange to some, but everyone who ever had a buy-out knows, not every potential buyer is serious.

3. When selling or licensing


So let us say you have a product or technology to sell or just to license.  Again, there will be a lot of meetings and negotiations with potential partners. The last thing we want is to be betrayed and have someone use our data for their advantage. Signing non-disclosure agreements will protect us from them sharing our information with competitors. It doesn’t matter what type of product or technology we have. It is crucial to make sure that all of our data is only ours and not a part of public knowledge.

4. Protect sensitive information

Doing business means collecting a lot of different information, emails, customer data, pixel data, and so many others. Some don’t realize how vital all of this data can be, but no one should underestimate its importance. If you have marketing partners, there is a need to sign a legal contract that will protect both sides. The amount of data we collect while doing a large business and market our product can be quite substantial. The more information is in question, the more decisive it becomes for everyone involved to be protected.

5. Employees having access to important data


There is a lot of effort we need to put in to develop our company. The bigger the company, the more vital information it has, and therefore, it requires even more protection. The last thing any company wants to happen is to have a worker leave the company and use all the information from when he was working for us to now be a competitor.  A good thing to remember in this type of situation is that you need to have a professional lawyer to make an NDA that will serve that specific situation. Of course, it is not hard to find a generic one somewhere on the internet, but it is much safer to have an experienced lawyer at your side.

6. Saving money on potential legal expenditures

It is better to prevent than to cure. It is known as wisdom, and it is true here as well. If you don’t have a Non-disclosure Agreement and there is a need to go to court, what happens next? Well, it is going to be a lot more complicated and expensive than in a situation where you had an NDA. Even if you win in the court of law, you will have to spend a lot of time and money, and both of those are precious resources we can spend somewhere else.

7. It helps build trust


This one is rather simple. When your relations with your respective partner are organized via a legal contract, it is much easier, and everyone involved will feel more comfortable. When we don’t have to worry about potential problems, we can have much more beneficial relationships with others.


So as we have seen, there are many reasons why someone might need an NDA. The more prominent the business you have is, and the more relationships you have to establish with other companies and clients, it will be even more essential to be on the safe side of the law