BVCA standardizes confidentiality agreements

The UK private equity trade body has designed a universal confidentiality agreement for buyout investments.

The British Private Equity and Venture Capital Association (BVCA) has unveiled a standardized confidentiality agreement, intended to help lower fund managers’ legal costs. 

The document provides buyers and sellers with a “middle ground” document that both parties can feel comfortable using as a starting point when negotiating confidentiality agreements, the BVCA said in a statement. Ultimately that may lead to less legal billing hours, and less time at the negotiating table.

“Although there are some areas which will require tailoring, and some areas where the circumstances or complexity of the deal will require additional provisions to be negotiated, the standardization of the most common provisions will, we hope, reduce the extensive time and expense that BVCA members and their advisers spend in negotiating such agreements,” the BVCA said.

The form is a creation of the BVCA’s Legal & Technical Committee, comprised of industry fund managers and lawyers, who for the past year have been consulting with investment banks and law firms to produce a document they feel reflect current market practices.

Specifically, the agreement states that buyers should make any third parties to the transaction aware of its terms and take responsibility for any third-party breaches. It also states that a seller cannot disclose the buyer’s interest in the transaction without the buyer’s consent, among other features.

The BVCA is soliciting feedback on the document, potentially leading to an updated standard confidentiality agreement in 12 months’ time.

Based on feedback from the consultation process, the working group will next aim to produce a back to back agreement for lenders and advisers which can be used in conjunction with the standard confidentiality agreement, according to the statement.