Non compete when buying book

[wornout]

Hello all! Looking for some guidance on a sticking point in selling my book. The buyer is insistent on me signing a noncompete. He says the bank is requiring I sign the non compete.

I am selling because I cannot find the staff so I do wish to keep working. Most of my opportunities have been with other larger agencies - in our area. But, I don't have an offer at this time for employment. I have turned down 2 offers because they wanted me and the book - but I had a buyer already in place.

I have agreed to a non-solicit for 3 years. Isn't that sufficient? If I sign a noncompete - where would I work?? Should I just move on and find a new buyer? Or, am I going to encounter this every time? I had told the buyer originally that I would sign a non-solicit but now we are stuck on this point. I would be unemployable if I sign.

 

[adjusterjack]

You're right. You'd be unemployable. I was the victim of a non-compete several years ago.

If you can't get your buyer to back off on the non-compete, say good bye to him and re-market your book.

And when you get a buyer make sure you have a lawyer look over your contract and advise you how to protect your interests.

 

[somarco]

I have agreed to a non-solicit for 3 years. Isn't that sufficient?

That's up to you. How badly do you want to sell to this person? He may or may not be willing to negotiate, but no one here can say what he will do. He may walk away.

If I sign a noncompete - where would I work??

Depends on how it is worded.

I had a NC at one time. When I left that company I continued to work the same industry, same territory. But I never took any of their clients.

 

[Markthebroker]

That's up to you. How badly do you want to sell to this person? He may or may not be willing to negotiate, but no one here can say what he will do. He may walk away.




Depends on how it is worded.

I had a NC at one time. When I left that company I continued to work the same industry, same territory. But I never took any of their clients.

From everything I have seen, signing a non compete just means you can't go after those same clients, NOT that you can never work again in the same industry. Why would the buyer ask that? How would it benefit him?

 

[Tahoe Ray]

From everything I have seen, signing a non compete just means you can't go after those same clients, NOT that you can never work again in the same industry. Why would they buyer ask that? How would it benefit him?

That's more Cali...non compete means he can't just turn around and start another agency in the same area (normally dictated by some distance clause). Non solicit just means you cant go after those old clients.

BUT, with a non-solicit, old clients may be able to "reach out to you" (how do you prove that?) So these buy-outs try to include a non-compete instead.

 

[Markthebroker]

That's more Cali...non compete means he can't just turn around and start another agency in the same area (normally dictated by some distance clause). Non solicit just means you cant go after those old clients.

BUT, with a non-solicit, old clients may be able to "reach out to you" (how do you prove that?) So these buy-outs try to include a non-compete instead.

Ahh, oh.

So the next question is, if he signs the non-compete, but goes ahead and does it anyways, how enforceable is it?

 

[Tahoe Ray]

Ahh, oh.

So the next question is, if he signs the non-compete, but goes ahead and does it anyways, how enforceable is it?

It's common in a lot of businesses but enforceability is again often by state.

I really think it's pretty fair. If I sold my business for a few million, should I be allowed to open up a new one across the street and compete directly for new clients (even w a non-solicit) with the people that I just sold my business to?

If i was moving to AZ or something, then sure.

 

[somarco]

if he signs the non-compete, but goes ahead and does it anyways, how enforceable is it?

Can a non-compete be enforced? Sometimes yes, sometimes no.

The question that should be asked is, if I am sued to enforce the agreement, how much will it cost in legal fees to defend?

 

[somarco]

If I sold my business for a few million, should I be allowed to open up a new one across the street and compete directly for new clients (even w a non-solicit) with the people that I just sold my business to?

You could run your business from anywhere, including sitting on the beach sipping drinks with tiny umbrella's.

But if you had a "hands on" type of service business, moving out of state or out of the area, should not be an issue.

 

[Tahoe Ray]

You could run your business from anywhere, including sitting on the beach sipping drinks with tiny umbrella's.

How did you find out about my business model!?!