The expression "the devil is in the details" has never been more relevant than now as companies striving to grow by mergers and acquisitions are evaluating opportunities to consolidate more sales into less overhead, expand the scope of their services, and differentiate themselves from the competition. So the saying goes that even minor concerns in planning and strategy, if overlooked, can cause big trouble later on.
In M&A transactions, it's in the owner's best interest to minimize risk and prevent misunderstandings by keeping attentive to the details involving communication and due diligence. My NAPL teammates who work with me on M&A client-members (Tim Fischer, Kathleen Appleton, Leslie Karhoff, Bruce Perlstein, and Jim Coughlin) know that we tend to obsess over the subtle nuances that other consultants or brokers may just gloss over.
One great example from the past week involved an NAPL client-member who is exploring a possible sale of his successful digital printing company. In reviewing a Non Disclosure Agreement received from the buyer's M&A advisor, we noticed a glaring tactical error: the document was "one way", protecting the NAPL client-member from the buyer's inappropriate use of the seller's confidential information.
But the document did not put any limitations on our client to abide by the same terms of non-disclosure. The buyer's advisor had left his client unprotected from the seller using the buyer's confidential information.
That means that in the course of conversations between the parties, our client did not have a legal obligation to avoid using the buyer's information in the ordinary course of business (competing for customers; hiring key people; exploring other M&A situations).
The client was prepared to sign the NAPL Non Disclosure Agreement, which is mutual, meaning, it obligates both parties to maintain confidences. Once we realized the advisor's error, we told our client to put aside the NAPL document, and he agreed to go with the version submitted by the buyer's advisor. The advisor goofed, it should have been "two way".
For our client in this case, there is less risk with the "one way" Non Disclosure Agreement. Yes, it is unlikely that anyone will ever read the document again......unless something goes very wrong.
But for that one day, the axiom "the devil's in the details" was on our minds here at the NAPL M&A laboratory.
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