Noncompetes After a Sale: Why Every Word Matters

Hello and welcome back to another session of Visibility CFO, Tax and LEGAL. I’m Emily Stubbs, and this is where we unpack real challenges our clients face—and share creative, actionable solutions that turn confusion into clarity.

Today we’re diving into non-competes—but not the employment kind that may or may not be enforceable depending on your state. We’re talking about non-competes in the context of selling a business—a scenario where they’re still widely enforceable and too often overlooked.

Non-competes in a business sale can look like boilerplate language to be skipped over—but don’t be fooled. A few small words—or even a single misplaced comma—can make a massive difference.

A vague definition of “industry.” What a difference between a restriction from competing in the staffing industry and competing in mechanical engineering staffing.

A limitation on a string of items that is separated incorrectly by a misplaced comma.

Or whether competing activity includes passive ownership, or what the company being sold may be doing in the future even though it is not a service or product at the time of sale, etc.

These details might seem minor during negotiation—especially when everyone is focused on purchase price, holdbacks, and working capital. But fast-forward a few years, and they can become major roadblocks.

I’ve worked with sellers who felt totally burned out at the time of sale, and competing in the industry again was the last thing on their minds. So agreeing to a broad non-compete in exchange for other deal points did not seem like a big deal. But a lot can change in a 5 or even 3 year non-compete period. You can feel refreshed, inspired, but be boxed out of the very industry you know best.

If you're the seller—the key is not to give away too much too easily. It should be fair to the buyer because they are paying you for the whole package—but not more than that. If your business operates in one city, does it really make sense to agree to a statewide—or even nationwide—restriction?

If you're the buyer—think ahead. What’s your appetite for future growth? Maybe you’re only local today—but what if you want to expand regionally in two years? Your non-compete language should protect that path.

Whether you're selling your company, buying one, or just trying to protect your long-term business strategy—non-competes deserve a second look.

They’re not just about today. They're about what’s possible tomorrow.

So if you need help drafting or reviewing a non-compete that actually aligns with your long-term goals, reach out. A few well-placed words now can save you a mountain of regret later.

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