Non-Compete Agreement

A legally binding contract that establishes confidentiality obligations between parties sharing proprietary information. NDAs are essential tools for protecting trade secrets and other sensitive intangible assets during due diligence, partnership discussions, and employee onboarding.

A financing instrument developed by Y Combinator that provides investors with the right to receive equity at a future priced round, subject to a valuation cap and/or discount. SAFEs are simpler than convertible notes, carry no interest, and have no maturity date.

A legally binding contract between a company's shareholders that governs their rights, obligations, and the rules for key decisions including share transfers, board composition, dividend policy, and exit mechanisms. Essential governance infrastructure for investor-backed companies.

A contractual clause that limits a party's ability to engage in specified activities, typically restricting competition, solicitation of clients or employees, or use of confidential information after the termination of an employment or business relationship. Restrictive covenants are common in M&A transactions and executive employment agreements, and their enforceability varies significantly across jurisdictions.

Confidential business information that provides a competitive advantage, including formulas, processes, methods, customer lists, and supplier terms. Unlike patents, trade secrets are not publicly disclosed and are protected through confidentiality agreements and security measures rather than registration.

An intangible asset that meets the identifiability criteria under IFRS 3 or IAS 38, meaning it is either separable from the entity (can be sold, transferred, or licensed independently) or arises from contractual or legal rights. Identified intangible assets are recognised separately from goodwill in purchase price allocations.

A contractual provision in an acquisition where a portion of the purchase price is contingent on the acquired company achieving specified performance targets post-completion. Earnouts bridge valuation gaps between buyer and seller expectations.

A situation in which one party in a transaction possesses more or better information than the other, creating an imbalance that can affect pricing and deal outcomes. Information asymmetry is particularly acute in intangible-heavy businesses, where the true value of assets such as proprietary data, know-how, and relationships is difficult for external parties to assess.

AI and Competitive Moats: Valuing Proprietary AI Systems

Not all AI creates competitive advantage. This article examines the four types of AI moats — data, model, integration, and network — and provides a valuation framework for assessing the defensibility and durability of proprietary AI systems.

What is an information memorandum?

An information memorandum is the detailed document a seller's adviser prepares to market a business to buyers under NDA — financials, customers, team, growth and the assets behind the price.

What are the main types of intangible assets?

IFRS 3 and ASC 805, the business combination standards, group intangible assets into five illustrative classes: marketing-related, customer-related, artistic-related, contract-based and technology-based. The list is not exhaustive.

How do I value a business I want to buy?

Apply a multiple to the target's normalised earnings, then test whether the intangible assets behind those earnings — customers, technology, brand, people — justify it and will transfer to you.