New Jersey Business Brokers: Article About Non-compete Agreements Help Business Sale
When you set out to sell your business, your goal should be to provide a neat and tidy package that allays any possible concerns that purchasers may have. One of the factors that buyers consider when evaluating a company for sale is its competition for market share. One way you can make your business more attractive to prospective buyers is to take measures that preclude the chance of competition from within. By having your key employees sign non-compete agreements, you can provide purchasers with a measure of reassurance. Your New Jersey business brokers offer guidance in drafting this type of document.
A non-compete document is legally enforceable once it is signed. A strong non-compete should be a term of employment or must be linked to another legal agreement, such as the sale of your company. It must provide reasonable consideration. It can be applicable only to those activities that would endanger the employer, such as using trade secrets for personal gain.
The agreement must have a reasonable time frame, such as two years subsequent to the end of employment. It must also be reasonably limited geographically, such as within the same state or county.
A non-compete document that you draft to protect the purchaser of your business pertains to that proprietary or sensitive information your key employees already know. In contrast, signing such an agreement at the outset of employment infers that the employee will not misuse any knowledge he or she is about to learn on the job.
The business brokers from Selby Associates of New Jersey would be happy to answer any question you have about corporate exit planning or buying a business.
Your purchaser may also ask you to sign a non-compete agreement before closing the sale. This is simply a business request that helps the buyer safeguard an investment and does not reflect a degree of trust. Since you do not plan to start a new business just like the one you're selling, you should readily agree to sign, but have your lawyer look it over first to make sure it would not affect any future plans you have, such as becoming a consultant. Affirming that a non-compete document is legally binding is also the domain of your lawyer.
If you get wind of employees planning to leave your business after closing and start their own similar companies, sit them down for a friendly chat. Go over the non-compete agreements that bear each of their signatures and point out the legal problems they are facing in violating the agreement. Often, speaking with them in a non-threatening way may forestall rash actions.
A non-compete agreement is one of the warranties at your disposal when you need to clinch the sale of your company. By making sure the document is legally binding, you are acting in good faith to help the new owner succeed without unfair competition.