Trade Secret Protection in the Sale of a Business

Trade secret protection in the sale of a business is vital for protecting the interests of both the seller and the (prospective) buyer. The conclusion of an appropriate non-disclosure agreement is a fundamental measure for regulating the protection of trade secrets throughout the sales pro- cess. It is important that the management of the target company rig- orously protects confidential information and recognises the necessity of controlling the flow of information between the target company and potential buyers. Despite the meticulous drafting of non-disclosure agreements, it is important to understand that even the most stringent agreements amount to merely a "piece of paper”. Hence, controlling the information flow is crucial to ensure the security of business informa- tion throughout the sales process. In this process, due diligence emerges as a necessary component of the process, giving the potential buyer in- sight into the target company’s business. It should be borne in mind that any disclosure of business information may be risky and requires ap- propriate safeguards and controls over the information flow throughout the sales process.

Key words: trade secret, the sale of a business, due diligence, right to information, non-disclosure agreement, protection of trade secrets.