What is a standstill provision? What is the significance of a standstill provision in a confidentiality agreement?
A confidentiality agreement sets the rules by which parties discuss a possible transaction. The agreement contains provisions on how to use non-public information.
A standstill provision in a confidentiality agreement is designed to prevent hostile takeovers by entities who have been given non-public information by a company. It is typically in confidentiality agreements where a company is exploring strategic alternatives.
Usually there is a deadline or time period when the standstill expires. The deadline provides time for the company exploring strategic alternatives to pursue possibilities with various organizations.
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