When I started my career in M&A, confidentiality agreements (“NDAs”) were printed and sent to a potential buyer via facsimile machine. Then the recipient would send back a hand-written mark-up, typically a few days later via facsimile. The process would repeat until an agreement was reached. Forward-thinking parties back then would accept facsimile signatures. Some parties would require ‘wet signatures’ to be sent via overnight courier, which slowed the process further. If facsimiles were used for execution, because the original facsimile paper was unstable (thermally sensitive), we had to make photocopies of the facsimiles, to create permanent records. The entire process took a lot of resources and a lot of time.
Fast forward 3 decades and not only do we benefit from emails traveling at the speed of light from our phones, but there are now NDA processing services that offer cloud-based automation of the NDA process. Leading providers include but are not limited to: Ironclad®, Intralinks®, and Ontra®. We have worked on many sale engagements recently where our client elected to manage their NDA process through a cloud-based processing service.
Over the past 9-months we have seen a significant shift in the percentage of sellers using NDA processing service providers in mergers and acquisitions in the middle market of the aerospace and defense industry. We are now seeing nearly 50% of all transactions utilizing an NDA processing service to some degree. Note that we are not legal counsel, and it is not our place to advise our clients as to the legal risks associated with automating the NDA process.
If you are considering entering into a sell-side process in the near future, we encourage you to talk with your legal counsel about the risks and benefits of using a cloud-based NDA service provider.
Have a great day everyone,
William Alderman
Founding Partner
