Non-Compete Agreements in Business Sale Transactions: Buyer and Seller Considerations

Drafting Enforceable Restrictive Covenants, Optimizing Tax Treatment of the Agreements

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, July 9, 2015

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will offer guidance to deal counsel for drafting non-compete clauses in contracts for the purchase and sale of a business. The panel will examine key enforceability and tax considerations with non-competes and strategies to avoid unintended legal consequences and optimize the tax treatment of the agreements.

Description

Non-compete agreements are among the key contracts that accompany the sale or purchase of a business. When drafting and negotiating non-compete agreements, counsel for buyers and sellers must be aware of enforceability challenges and tax implications of the contracts.

Courts closely scrutinize non-compete agreements to ensure that restrictions related to time, industry and geographic range of competition are reasonable. Overly-broad or burdensome restrictions lead to enforceability problems down the road.

Non-compete agreements can also have significant tax implications for both the buyer and seller. Determining which set of tax rules applies—those governing compensation for personal services or those governing intangibles—can be complicated.

Listen as our panel of deal attorneys discusses best practices for drafting enforceable non-compete agreements that are likely to withstand court scrutiny and improve the tax efficiency of the underlying transaction.

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Outline

  1. Benefits and limitations of non-compete agreements in buy-sell agreements
  2. Drafting non-compete agreements
    1. Enforceability considerations
    2. Tax considerations
  3. Interplay with employee non-compete agreements

Benefits

The panel will address these and other key questions:

  • How can non-compete agreements be structured to avoid being found overly restrictive and unenforceable?
  • Are all non-compete agreements treated the same for income tax purposes? How do the tax rules work for these agreements?
  • What factors should counsel for buyers and sellers consider in evaluating whether to include a non-compete agreement as a part of the sale transaction?

Faculty

Jonathan Pollard
Jonathan Pollard

Principal
Jonathan Pollard

Mr. Pollard is a trial lawyer and commercial litigator who focuses his practice on competition law. He has...  |  Read More

Nicole J. Druckrey
Nicole J. Druckrey

Partner
Quarles and Brady

Ms. Druckrey practices in the firm's Commercial Litigation Group and serves as the Chair of the firm's Trade...  |  Read More

Priya Prakash Royal, Esq. LL.M.
Priya Prakash Royal, Esq. LL.M.

Managing Attorney
Royal Law Firm

Ms. Royal has extensive experience representing clients in diverse areas of the law, including commercial transactions...  |  Read More

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