Blog

September 12, 2024

Put Down the Pen – Using Market Data to Reduce Negotiations by 50% – 80%

”I can’t imagine ever going back”

– Middle Market Investment Bank, M&A Operations Lead

Earlier this year, we released our AI-generated study on NDA negotiations for private M&A, titled NDA Moneyball: The Results of M&A NDA Negotiations Don’t Change. To produce the study, we partnered with the US office of Eversheds Sutherland and with global managed service leader, Integreon.

In our study, we discovered incredible consistency in the final versions of M&A NDAs, regardless of the starting point of the forms. This led us to the conclusion that 80% of NDA negotiations are completely avoidable, without sacrificing the integrity of the deal. We suggested that aligning draft agreements with market standards could radically accelerate deal timelines and reduce unnecessary friction.

So, can a Moneyball case study be translated into real-life results?
Can one company and its partners (starting with the leaders at Integreon) eliminate 80% of the negation for an entire industry?

The results for the last quarter are in—and they’re even better than we hoped.

Market Match™ NDAs signed
with no negotiations

Reduction of all
issues negotiated

What We Learned

When we made our platform and the Market Match™ available this summer (using generative AI to create instant insights for sellers as to how the clauses can be adjusted to reduce negotiations without sacrificing on material protections), we assumed that it would take some time for the process improvements to have a material impact.

For example, we assumed it might take time and proof points for most sellers to be convinced to update their forms. We also assumed that many buyers would be reluctant to “put down their pens” just because an agreement was good enough. In both cases, our assumptions were partially correct.

We continue to see sellers, for a variety of reasons, exercise caution as to how far to go in adjusting their forms. We also have seen some “interesting” behavior from counsel to buyers who have decided to find new issues in agreements and clauses that they had previously accepted even a few days previously.

With that said, the outcomes for banks using our platform and our partners at Integreon have been outstanding. Here are some highlights:

Speed, speed, speed –

Over 50% of all M&A NDAs negotiated on our platform over the last quarter were signed with zero edits. That means investments banks using TCN and Integreon last quarter were 5x more likely to get their NDA signed without negotiation¹ (and their CIM out the door) than the status quo.

Shrinking the negotiations when they happen –

It’s simply not possible to eliminate all negotiations, but when they happen the TCN platform minimizes both the frequency and the intensity of the negotiations. For example, our initial study reflected that the definition of Confidential Information and Exclusions is traditionally negotiated over 90% of the time. But on TCN last quarter, we reduced this negotiation rate to less than 30% for all agreements. Furthermore, we saw that in almost every instance the negotiation of this clause on TCN required only one turn rather than a series of volleys.

Reducing banker workload and increasing transparency –

Earlier this summer we introduced our NDA Deal Links for bankers to embed in their teasers and cover emails. Now, those bankers no longer have to issue or track individual NDAs. Buyers can opt in to a deal and access the NDA through a self-service model with no banker effort required. Then, the bankers are updated on the negotiation and signature status for their entire project through real-time notifications and transparent dashboards provided by TCN and by our partners at Integreon. No more XLS required when it comes to your NDA tracking.

The response to the NDA Links and our platform as a whole has been overwhelmingly positive, with one M&A operations leader saying:

“I’ve been working with contracts and contract tools for a long time. The speed and ease of TCN is game-changing. I can’t imagine ever going back.”

We’ve included more details on last quarter’s results below, but if you have not had the opportunity to do so, we encourage you to consider joining The Contract Network or request more information here.

Here are some more in-depth insights from last quarter’s negotiations.

The Most Negotiated Issues in Our Study Remain the Most Negotiated Issues

The most commonly negotiated clauses for M&A NDAs remain consistent across both our study and real-world negotiations on our platform. These include:

Non-Solicitation/Hire of Employees & Exceptions
Confidential Information Definition & Exclusions
Return or Destruction of Confidential Information
Compelled Disclosure
Permitted Disclosure to Representatives

Importantly, most negotiated clauses on our platform last quarter did not vary materially from the most negotiated clauses in our study, as noted above the volume of negotiations for Market Match™ clauses (seller forms that have been informed and conformed by market data) declined significantly relative to market.

Significant Reduction in Negotiations on Market Match Clauses

Of the NDAs signed in-system last quarter, 51% of those agreements were executed without a single edit from either party. For clauses where our clients’ seller forms aligned closely with market norms, the frequency of negotiations declined by at least 50% compared to the broader market. For example:

Confidential Information Definition & Exclusions

Market edit rates are above 95%, but in-system, we’ve reduced that to 29%.

Compelled Disclosure

Market edit rates hover around 82%, while in our system, only 25% of these clauses were edited.

Permitted Disclosure to Representatives

Market edit rates stand around 95%, while in-system, this dropped to 24%.

In every case, the percentage decrease in the most negotiated clauses was significant. By proactively drafting to market standards—without sacrificing substantive points—our clients have seen a material reduction in unnecessary edits and a substantial decrease in negotiation time.

One key driver of this success is our partnership with Integreon, whose team has led most of these negotiations. Their expertise in discussing market trends with seller counsel has been invaluable in aligning forms with market norms, reducing friction, and preventing unnecessary edits.

High-Frequency, High-Intensity Negotiations for Non-Solicitation

Some negotiations, such as Non-Solicitation clauses, remain high-intensity. Although we saw a significant reduction in the frequency of Non-Solicit negotiations (a whopping improvement of in-system edit rate of 18% compared to over 95% in the market), once this clause enters negotiation, it often requires multiple drafts to resolve issues around scope, covered persons, and duration. These are rightly subject to detailed back-and-forth discussions, given their material impact.

High-Frequency, Low-Intensity Clauses: A Matter of Drafting, Not Substance

Then there are clauses like Confidential Information Exclusions, which remain one of the most commonly negotiated clauses in the market but can be almost entirely avoided with proactive drafting. The two most common issues are:

Missing Commonly Expected Exceptions: Buyers expect to see exceptions for information that was:
- Previously known to them
- Publicly available
- Independently developed
- Made available by a third party
If your form doesn’t include all four, you’re almost guaranteed to receive a markup.
Excluding Representatives: Another frequent oversight is referring only to information in the possession of the Recipient without accounting for information known by their Representatives. Failure to address this forces buyers to request a revision to include Representatives—an amendment accepted 100% of the time.

In almost every case, these are not substantive disagreements; they are more likely drafting oversights. And it’s these oversights that cause recipients to pick up the pen. Once they do, it often leads to further revisions, extending the negotiation unnecessarily.

We also note that some sellers have introduced more aggressive clauses—such as requiring diligence or verification for third-party information or asking recipients to prove they had certain information before the NDA. These approaches are still a minority position and are consistently marked up by buyers.

Conclusion

The results are clear. Sellers who use TCN and align their forms with market standards—without sacrificing on substantive points—are getting their deals done faster and with less friction. Integreon’s role as a trusted voice in these negotiations has proven essential in helping guide seller counsel through market updates, ensuring forms are drafted in line with prevailing norms.

So, Put Down the Pen—Let Data Guide Your Drafting and streamline your next M&A NDA negotiation. It’s time to draft smarter, negotiate where it matters, and close deals faster. It’s also time for you to try The Contract Network.

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[1] In our Moneyball study, we found that more than 95% of the NDAs in our dataset required some level of negotiation. This makes NDAs on our platform 10x more likely to be signed without negotiation. For purposes of our estimates here, we charitably assume an industry average of 90% of all M&A NDAs require some form of negotiation, reducing our productivity gain to 5x.