Non-competes. You’ve probably been exposed to them at some point. Perhaps you have employees sign them or maybe you have signed one yourself at some point. Non-competes are also a very important component of a business transfer.
Imagine this: You bought a high-end restaurant. Since you struck a deal between yourself and the previous owner without outside council (to save money, of course), you didn’t think about adding a non-compete to the sale agreement. Now, several months later, the previous owner has opened up another establishment in the same community. He is competing with you and taking your business since several of the ‘regulars’ are still loyal to the original owner. Unfair? Yes. Frustrating? You bet. Illegal? Sorry, no.
No matter how amicable the sale, your livelihood depends on how you structure the deal. We have seen very real situations like this in the past and its heartbreaking. Always be sure to get a good, enforceable non-compete as a part of your deal structure if you’re a buyer. If you’re a seller, be prepared for this reasonable request.
As business brokers, we’ll guide you on all the necessary components of a deal that are tailored for the business being transferred. When you’re ready to buy or sell a business, contact us.