Shhh…this information is private and confidential: Sports Direct bought Game
On 21 June 2019, video game giant Game Digital PLC (“Game“) announced that it had accepted a mandatory cash purchase offer for its business from Sports Direct International PLC (“Sports Direct“). Sports Direct have been a shareholder in the business since July 2017 and were required to make a mandatory offer to Game after taking its shareholder stake about 30%.
In its announcement, the board of directors of Game stated that they were disappointed by Sports Direct’s decision to issue its offer document unilaterally whilst sale and purchase discussions were ongoing.
This highlights an important issue for anyone who is considering whether to sell or buy a business – make sure that you have an appropriate agreement in place, from the outset, to control any public announcements.
Confidentiality agreements, also known as non-disclosure agreements (NDAs), are usually signed at an early stage of negotiations. Such agreements seek to ensure that any information being shared between the parties remains confidential. In the context of corporate sales, the parties will be keen to maintain the confidentiality of any information which may affect their respective bargaining positions, or which may be of benefit to competitors, for example, trade secrets.
In addition, as illustrated by the Game/Sports Direct example, it is essential to impose restrictions on the scope, nature and timing of the information that the buyer or seller may broadcast, to avoid public embarrassment or any prejudice to either party.
Various pieces of information that are not publicly available can be protected by a non-disclosure agreement, including:
- Details of a new product line
- New technology or innovations
- Business plans
- Financial information
- Customer and supplier names
- Employee details
If you are thinking about selling or buying a business, we can help to protect your valuable information with an appropriately drafted non-disclosure or confidentiality agreement.
For more information, please get in touch with our commercial team.