Banks and NDAs

January 06, 2020

by a searcher from Dartmouth College in Allentown, PA, USA

I'm under LOI on a deal and about to reach out to banks for financing. Should I ask banks to sign a NDA before sharing specific details about this opportunity?

Or will that make me look like an amateur? My sense is that banks won't sign NDAs, but I'm not sure.

Thank you in advance for any thoughts and feedback.

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Reply by a lender
from Bryant University in New York, NY 10018, USA

As a lender, we have an internal document that we use if a borrower is looking for us to agree to an NDA. There are certain 3rd parties that we work with for data, funding, leverage, etc. and many NDAs would be too restrictive for us to actually sign. I have let deals go because I refused to sign an NDA. I think the truth is really if someone wanted to screw you out of the deal, they will find a way to do it regardless of whether or not you have an NDA signed. I personally wouldn't request one from a bank, but I would request one from someone in private equity, an advisor, or FF funding source.

Reply by a searcher
from Ohio State University in Chicago, IL, USA

Hi there. Part of my job in private equity was to help arrange the financing for deals, and I regularly solicited financing from banks and private lenders. I rarely (never I think) asked for a lender to sign a separate NDA, as they were typically covered under the "representatives" concept which is standard in most NDAs for transactions. Occasionally, I would have them "confirm to be bound by the NDA" in an email response to me if a banker or seller was particularly touchy about it. I would defer to the advice of your attorney but this is my practical experience.

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