I have already posted a long rant about the proliferation of unreasonable non-disclosure agreements. Today I received a 22-page NDA, so I'm in a frenzy again (Mallesons and Allens are currently neck and neck contenders for the "most outrageous NDA" award).
These long documents are always 80% boilerplate. When you strip away all the bullshit there are four or five core terms that every private equity investor should carefully consider before scrawling a signature. Here are the ones I look for:
1. Term: insist on one, and the shorter the better. Anything longer than two years is unreasonable.
2. Indemnity: these stink, but if the vendor absolutely insists on receiving an indemnity then it should be tightly limited to direct losses suffered due to a breach of the agreement.
3. Return or destroy: preference for destroy since returning stacks of documents is an expensive nuisance. Must be allowed to keep investment committee minutes, investment proposal papers and similar fund records.
4. Vendor release: probably being a bit anal here, but it's worth checking that any release regarding accuracy of information or duty of care by the vendor can't undermine future (critical) legal documents like a share sale agreement.