Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Non-Compete Agreement / Non-Competition Agreement

Definition

A contract that limits the seller or key employees from competing with the business after the closing.

See Also

Key employee, non-solicitation agreement

Tips

It’s important for the seller to ask any key employees to sign a non-compete before they begin the sale process. If the seller doesn’t have the leverage to obtain a non-compete from a key employee, or if non-competes are illegal in a state, such as California, a non-solicitation agreement can be used, which prohibits employees from actively soliciting employees or customers of a business after termination.

Related Resources

Alternatives to Non-Competes with Employees