Non-disclosure agreements may be essential for protecting your company’s intellectual property and other confidential information. You may use this type of agreement to help protect your business during situations when you need to share confidential, private or sensitive information with an individual or another company. Understanding when it is necessary to have an NDA may prevent threats to your company and lower the risk of litigation. 

According to Entrepreneur, there are several situations when your business may benefit from using an NDA. One of the most common occurs when your employees need to access confidential and/or proprietary information in the course of performing their jobs. By having your employees sign NDA documents before accessing this kind of information, you may protect your company. Without an NDA, for example, there may be little you are able to do to stop an employee from leaving and starting his or her own business using client lists, proprietary technology and other IP he or she gleaned from your company. 

Many types of business discussions also benefit from NDA documents. For example, when you are considering selling your company or bringing on new investors, you may need to share certain internal information with potential buyers or investors. Most people will need to see data such as business financials and other sensitive information before making a decision about investing in or purchasing your business. Having everyone sign NDA documents before sharing this information may protect your company from losing valuable, confidential data to potential competitors or the general public. In general, an NDA may help ensure all parties understand what types of information you want to protect and encourage them to respect confidentiality rules.