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NDA for Share or Asset Sale UK: Protect Your Deal

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Part ofCorporate Legal Documents UK

Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
When someone expresses interest in buying your company, whether through a share purchase or an asset and undertaking deal, you will almost certainly need to share sensitive information with them long before any binding contract is on the table. Financial records, customer lists, supplier terms, intellectual property, staffing details and commercial strategy all tend to come out during due diligence. A confidentiality agreement, often called a non-disclosure agreement or NDA, is the mechanism most sellers use to control how that information is handled. It sets out what the buyer can do with what they learn, what they cannot do, and what happens if the deal falls through. On this page, we look at how these agreements work in the context of a share or asset sale in England and Wales, what tends to go into them, and the practical points sellers and buyers should think about before signing.

What this document is

A confidentiality agreement in the context of a share or asset sale is a contract between the target company (or its shareholders) and a prospective buyer. It governs the disclosure of non-public information during the exploratory and due diligence phases of a transaction.

The agreement typically restricts the buyer from using what they learn for any purpose other than evaluating the proposed deal, and prevents them from passing it on to third parties without permission. These agreements can be one-way, where only the seller is disclosing information, or mutual, where both sides share sensitive material.

In a share sale, the buyer is acquiring the company itself along with all its liabilities, so they tend to want access to a wider pool of information. In an asset sale, the buyer is cherry-picking specific assets and contracts, so disclosure may be narrower but still commercially sensitive.

Either way, the confidentiality agreement is usually the first document signed in the process and sets the tone for how the parties will behave if negotiations progress. A well-drafted version gives the seller a clear route to stop misuse of the information if things go wrong.

How to use this document

  1. Work out what information needs protection. Before drafting anything, think about what you will actually be sharing and how sensitive it is. Financial accounts, customer data, trade secrets, employee details and pricing structures all carry different risks, and your agreement should be broad enough to cover everything the buyer might reasonably see during due diligence.
  2. Decide whether the agreement is one-way or mutual. In most share or asset sales the seller discloses more than the buyer, so a one-way agreement is common. However, if the buyer is a trading company sharing its own plans, financing arrangements or integration strategy, a mutual agreement may be appropriate so that both sides are equally protected.
  3. Define the permitted purpose carefully. The permitted purpose clause is one of the most important parts of the document. It should state that the information can only be used to evaluate the proposed transaction, and nothing else. This stops a buyer from using what they learn to compete, poach staff or approach your customers if the deal does not complete.
  4. Agree on duration and return or destruction of information. The agreement should say how long the confidentiality obligations last, often two to five years from disclosure, and what happens to the information if the deal collapses. Most agreements require the buyer to return or destroy all copies, including anything held digitally or shared with their advisers.
  5. Sign before sharing anything substantive. It might sound obvious, but the agreement needs to be signed and dated before any meaningful information changes hands. Once confidential material has been disclosed without protection in place, you cannot retrospectively make it confidential, so get the document in place at the start.

Common questions

If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.

Common questions

Q Do I really need a confidentiality agreement for a share or asset sale?
If you are sharing anything that is not already public, it is sensible to have one in place. Without a signed agreement, you have very limited ability to stop a prospective buyer from using or passing on what they learn. Even friendly, informal discussions can result in commercially damaging leaks, so putting a confidentiality agreement in place early is standard practice in UK corporate transactions.
Q What is the difference between a share sale and an asset sale for confidentiality purposes?
In a share sale the buyer acquires the whole company, including liabilities, so they typically need access to more information. In an asset sale the buyer picks specific assets or business lines, so disclosure can be narrower. The agreement should reflect the type of deal being considered, and the categories of confidential information should match what will actually be shared.
Q How long should the confidentiality obligations last?
There is no fixed rule in English law, and the right duration depends on the nature of the information. Highly sensitive commercial data such as customer lists or pricing may justify longer protection, while less sensitive information might have a shorter window. Periods of two to five years are common, but trade secrets may be protected for as long as they remain confidential in practice.
Q Can I stop the buyer from poaching my staff or customers?
A confidentiality agreement can include non-solicitation provisions which restrict the buyer from approaching employees, customers or suppliers they learn about through the process. These need to be drafted carefully to be enforceable, as overly broad restrictions may be struck down by the courts. A tailored clause focused on specific, identifiable relationships tends to stand a better chance of holding up.
Q What happens if the buyer breaches the agreement?
Remedies typically include damages and injunctive relief to stop ongoing misuse. In practice, proving loss from a confidentiality breach can be difficult, so many agreements include express wording allowing the seller to seek an injunction without having to prove specific financial damage. Whether a court grants one depends on the circumstances and the strength of the evidence.
Q Does the confidentiality agreement stop the deal being binding?
A confidentiality agreement is about information handling, not about committing to the transaction itself. It is normal for the agreement to expressly state that neither party is obliged to proceed with any deal. Binding commitments to buy or sell come later, in documents such as heads of terms, a share purchase agreement or an asset purchase agreement.
Q Can advisers and investors see the information?
Most agreements allow the buyer to share information with their professional advisers, lenders and sometimes investors, but only on a need-to-know basis and subject to equivalent confidentiality obligations. The buyer usually remains responsible for any breach by those they pass the information to, so they have a direct interest in keeping circulation tight.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.