A bank is initiating the process of acquiring another smaller bank. Before negotiations happen between the organizations, which of the follwing business documents would be used as the FIRST step in the process?
A. MOU
B. OLA
C. BPA
D. NDA
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I initially answered “D” but kept thinking this over and over, seeking that final resolution. Fortunately, I found it, on a legal website: https://www.nolo.com/legal-encyclopedia/how-to-draft-a-letter-of-intent-loi-or-term-sheet.html.
If you scroll down to the “CONFIDENTIALITY” section, you’ll find this, “[…] ideally, before negotiating the LOI, you and the other party have already signed a confidentiality agreement covering all of the non-public information […]” and it goes on to say that you should use something like an NDA for that.
Keep in mind, LOI (letter-of-intent) is MOU, just a different way of saying it.
For me, that puts this one to bed. The answer is D, 100%. Please reference the above article.
NDA…Before you can review any documents etc you need to make sure your secrets can’t be traded….
An NDA is usually completed before entering into any formal agreement or starting negotiations in order to protect the disclosure of sensitive information. An MOU is usually the first step in a formal agreement. Since the negotiations haven’t started, the answer is most likely NDA.
This is definitely MOU. NDAs aren’t usually signed until right before or right after a formal agreement is made. MOUs are usually done first before or at the start of negotiations as it is the first expression of desiring to work together and outlines high level goals and roadmap between two companies.
Non-disclosure Agreement (NDA)
Why an MOU
Memorandum of Understanding (MOU)