Non-Compete Agreement

Definition

A contract that limits the seller from competing with the business after the closing. This also comes into play in M&A transactions when key employees are asked to sign a non-compete.

See Also

Non-solicitation agreement, key employee.

Tips

If you don't have the leverage to get your key employees to sign a non-compete, or if non-competes are illegal in your state, such as California, then try a non-solicitation agreement, which precludes your employees from actively soliciting your employee or customer base after termination.