I’ve recently come across LPS refusing to sign NDA’s. I’ve sat on the LP side, signed plenty of NDA’s, so I’m a bit confused as to this new trend. Is this just a shift in the power dynamic between GPs and LPs? It seems very odd, to just say “trust me, we won’t tell anybody.”
On the same premise, I guess we should all just negotiate partnership agreements on a “trust me” basis, and not have anything in writing?
| +58 | Long Game: Development vs Asset Management | 22 | 3h |
| +28 | Future of Multifamily | 15 | 1d |
| +22 | CRE Banking @ Top 3 Bank or Asset Management at Public REIT | 13 | 3d |
| +22 | No IB RO considering RE | 9 | 1d |
| +19 | Most Correct Way to Grow Rents in MF Development Underwriting | 4 | 2d |
| +18 | Brokerage/RE Market | 1 | 5h |
| +18 | PGIM investment analyst low pay | 16 | 11h |
| +17 | Midweek timing of resignation? | 13 | 1h |
| +15 | Reneging MBB Offer to search for CRE job? | 9 | 11h |
| +13 | Early-career CRE analyst (1 yr experience + internships) — looking for resume & job search advice | 2 | 16h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Partnership agreements have a functional purpose. But what is the actual purpose of a NDA?
I don't mean the theoretical purpose. I mean the actual purpose. Have you ever heard of an LP being sued for "disclosing" a real estate deal? Has the NDA in question—something that exists in a sort of legal grey area already—held up in court?
Like a lot of things in our industry, it’s a formality. Have I ever heard of someone getting sued for breach of an NDA? Yes. Is it common? No.
My point is it’s silly to not sign. It’s widely accepted, the sponsor (may) have some trade secrets others don’t, and lastly - sponsors typically have to sign an NDA for the deal. So, any parties to that info need to be bound by a joinder, as least.
If you don't sign an NDA you don't see my deal. It's not that difficult. Never had this problem before.
Tend to agree.
Either your NDA is too restrictive, and/or you're being overly paranoid to the point of delusion it becomes insulting to a degree to the LP. Like, is your 15% IRR value-add multifamily strategy involving renovating kitchens that secretive that you need to add a layer of yellow tape and have the LP actually incur legal fees reviewing simply the chance to look at your deal? It's not exciting. They rarely make sense and all it is is a cost drain on your potential relationship. NDAs are performative, and legacy systems..it's the digital / information age right now. You will get left behind trying to hide your deal from everyone who can easily find it if they wanted to, anyway.
I don't think capitain doom above woke up on the right side of the bed
Just have them agree to a generic/basis confi/circumvent via email
Your attorney probably overcooked it, which can be a bit of an awkward conversation. Tell em you need an idiot proof version that still covers the essentials, that’ll give em a nice ego stroke to hold onto.
That’s what I was thinking. However, I’ve never just point blank refused to sign one nor have I had a counterparty say that to me. There’s usually a couple of rounds of redlines between the attorneys and it gets worked out. Annoying and it slows down deals but it happens on occasion.
If every NDA is turning into a freaking litigation, then your attorney is probably being the overzealous one.
I’ve also seen some pretty extensive redlining of NDAs when looking at deals with environmental problems.
As an LP, I will sign NDAs for deals that I like and that the sponsor has exclusivity on. Otherwise it is probably a waste of time and money.
Also, “trust me” is a laughable thing to say in this business. You should definitely get an NDA in place if someone is saying that.
Saepe non omnis voluptas ab. Quia dolores fuga dolores iure rem. Dolorem eveniet magni quisquam enim vitae. Dolores perferendis iste error ratione.
Ipsa eveniet ullam suscipit et doloribus mollitia vel odit. Eius dicta maxime ut enim beatae harum consequuntur quam. Quam aut qui aperiam distinctio omnis qui. Sint dolores dolores ipsa possimus autem ratione est tempora.
Aut sed reiciendis perferendis rerum quis ut esse nulla. Id beatae eum autem adipisci qui. Libero molestias laudantium tenetur repellat consectetur ut eveniet.
Omnis molestias placeat dolores. Rem perferendis odit id rerum voluptate. Vitae similique libero voluptas ipsa ut ipsam dolore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...