In most cases, a seller is prohibited from selling the same products or services – or is prevented from addressing the same type of customers. Some buyers go into a transaction expecting them to drive away the person selling their business from the industry for years to come. But the applicability of non-competition agreements is a problem. The courts consider that non-competition prohibitions are in principle appropriate. There are several critical issues that a business owner must consider when working with a non-compete agreement. The general position is to focus on the fact that the terms of the agreement are fair and reasonable for both parties. Conditions must be drawn in such a way as to protect a legitimate commercial interest, while not preventing the seller`s ability to earn and live. These can be difficult to reconcile; However, if there is too restrictive or overly broad a view, most courts will refuse to enforce the agreement. A well-written non-competition clause is very careful to define what a seller cannot do. However, as a seller, you have rights to a non-compete clause and the contract should reflect those rights. A federation, without competition, usually involves a seller`s commitment not to compete directly or indirectly. It is helpful to ensure that the treaty describes what it is both directly and indirectly. For example, if you are selling a business that sells sporting goods, the creation of another sporting goods store would clearly be contrary to a non-compete clause.
But would it be indirect competition to become private? If you were selling sporting goods directly to your coaching clients, this could be considered. If you can fix the details of a deal not to compete during the sale, you won`t have to do it later in court. Buyers should also consider the need for additional payment in return for a non-competitive agreement, in addition to the purchase price paid for the acquired transaction. If the buyer tries to enter into non-competitive agreements with people who do not receive proceeds from the sale (for example. B employees), it is particularly important to take these people into consideration. If the agreement is structured as a sale of assets, employment with the buyer is considered a new job and, therefore, a competitive incapacity agreement would be supported by considerations of retribution in the form of a new job. However, in the case of a structured transaction such as a merger or sale of shares, an employee is permanently employed by the conclusion of the transaction, so that the purchaser would have to pay additional consideration to the employee in exchange for signing a non-competitive agreement.