Sellers use non-disclosure agreements “NDA” with potential buyers to protect the identity and confidential information about a business. This may be the first response a buyer gets to a business inquiry, and with good reason. A seller needs to protect their business operations from gossip and damage to their reputation.
Carefully read an NDA before signing. Sometimes the NDA is accompanied by the request for a personal financial statement “PFS” to prove to the seller that a buyer is qualified to proceed with an acquisition. Even with the submission of the signed NDA and PFS, the seller may decide not to share business information with that prospective buyer.
As a prospective buyer, you should be prepared to submit both an NDA and PFS for any business of interest. If you have retained a broker, you should also inform the seller at this time that you are represented by a broker who will also submit a signed NDA.