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Noncompete Covenants in M&A: Structuring to Bind Sellers and Key Employees

Navigating State Laws and Recent Court Cases Regarding Enforceability

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, December 8, 2021

Recorded event now available

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This CLE course will offer guidance in drafting noncompete clauses for both sellers and key employees in connection with the purchase and sale of a business. The panel will examine recent case law regarding the enforceability of non-competes in New York, Delaware, and California, and examine the implications they have for the drafting of non-competes. We will then discuss the impact of certain unique buyer and seller circumstances and how non-competes can be tailored to address them.


Covenants not to compete are a critical--and often closely scrutinized--component of any M&A transaction, and practitioners must be able to carefully craft these covenants in a manner that will stand up to post-closing judicial scrutiny.

Most states distinguish between the law governing covenants not to compete when incident to the sale of a business and the law governing these covenants arising solely out of employment. This means that noncompete covenants applicable to sellers in an M&A transaction must be approached differently than those applicable to key employees of the acquired company. With respect to sellers, the presence of reasonable consideration and a clear nexus between that consideration and the covenant is essential. Courts generally respect restrictive covenants in employment agreements for the duration of employment, and noncompetes can survive the term of employment if drafted to comply with state law.

In addition to enforceability issues, the appropriate contours of non-competition restrictions are highly fact-dependent and require careful consideration of the circumstances of each buyer and seller. Failing to tailor non-competition covenants to these circumstances can result in a seller being unreasonably restricted from future endeavors and a buyer being inadequately protected.

Listen as our authoritative panel analyzes covenants not to compete in M&A transactions. The panel discussion will compare New York, Delaware, and California case law relating to noncompetes and noncompetes about sellers and key employees.



  1. Noncompete covenants incident to the sale of a business
    1. Key documentation
    2. Key provisions
    3. Merger clause
  2. Noncompetes for key employees: federal and state law limitations
  3. Including founders and major shareholders in noncompete covenants
  4. Enforceability: comparing New York, Delaware, and California laws


The panel will review these and other critical issues:

  • What are some essential requisites to enforceability? How should noncompetition covenants be documented?
  • Where and when should noncompetition matters relating to a to-be-acquired business be addressed?
  • Why are noncompete covenants treated differently when part of an employment agreement?
  • What are some special circumstances that present unique drafting challenges? How can common pitfalls be avoided?


Stockman, Benjamin
Benjamin E. Stockman


Mr. Stockman practices in all areas of labor and employment law. Ben has handled a range of legal matters involving...  |  Read More

Straga, Daniel
Daniel G. Straga


Mr. Straga is an experienced corporate attorney with expertise in mergers and acquisitions, divestitures, venture...  |  Read More

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