Drafting non-competition agreements for asset purchases requires careful attention to enforceability standards, geographic scope, and temporal restrictions that vary by jurisdiction. Attorneys spend hours researching reasonable restrictions, customizing boilerplate language, and ensuring alignment with the underlying purchase agreement, all while balancing buyer protection with seller concerns about overly broad restraints.
Drafting non-competition agreements for asset purchases requires careful attention to enforceability standards, geographic scope, and temporal restrictions that vary by jurisdiction. Attorneys spend hours researching reasonable restrictions, customizing boilerplate language, and ensuring alignment with the underlying purchase agreement, all while balancing buyer protection with seller concerns about overly broad restraints.
CaseMark automates the creation of comprehensive, enforceable non-competition agreements tailored to your asset purchase transaction. Simply input key deal terms, and our AI generates customized non-compete, non-solicitation, and confidentiality provisions with appropriate restricted periods and territories, ensuring consistency with your APA while incorporating best practices for enforceability.
This workflow is applicable across multiple practice areas and use cases
Non-compete agreements are essential ancillary documents in M&A transactions to protect buyer's investment by preventing sellers from competing post-closing.
M&A transactions routinely require seller non-competes as standard transaction documents, making this workflow directly applicable to the broader M&A practice beyond just asset purchases.
The non-solicitation and restrictive covenant provisions can be adapted for employment separation agreements and executive employment contracts.
Employment attorneys frequently draft non-compete and non-solicitation agreements with similar structural elements, restricted periods, and territory definitions as seller non-competes.
Corporate attorneys handling business transitions, ownership changes, or partner buyouts need non-compete agreements to protect business interests.
General corporate practice includes various business transactions requiring restrictive covenants beyond formal M&A deals, such as shareholder buyouts and business restructurings.
Franchise agreements often require non-compete provisions when franchisees exit the system to protect the franchisor's proprietary business methods and territory.
Franchise terminations and transfers regularly involve non-compete and non-solicitation provisions with similar territorial restrictions and time periods as seller non-competes.
Enforceability depends on reasonableness of scope, duration, and geographic restrictions. CaseMark helps you draft agreements with appropriate limitations that courts are more likely to uphold, including reasonable time periods (typically 2-5 years), defined territories based on actual business operations, and clear legitimate business interests being protected.
Restricted periods typically range from 2-5 years depending on the industry, transaction value, and jurisdiction. CaseMark allows you to customize the duration based on your specific deal terms while ensuring the restriction is reasonable and proportionate to the goodwill being purchased.
Non-competition clauses prevent the seller from engaging in competing business activities, while non-solicitation clauses specifically prohibit targeting the company's customers, employees, or contractors. CaseMark includes both types of restrictions to provide comprehensive protection for the buyer's investment and acquired goodwill.
While non-compete provisions can be included in the APA, a separate agreement is often preferred for clarity, enforceability, and to bind individual seller principals who may not be parties to the APA. CaseMark generates standalone agreements that reference and complement your asset purchase agreement.
The restricted territory should reflect where the business actually operates and where the buyer needs protection from competition. CaseMark helps you define territories based on geographic radius, specific markets, customer locations, or other reasonable boundaries that courts will recognize as protecting legitimate business interests.
Sellers can challenge overly broad or unreasonable restrictions in court. CaseMark helps minimize this risk by generating agreements with reasonable scope, appropriate consideration (the purchase price), and acknowledgment provisions where the seller confirms the restrictions are necessary and reasonable to protect the buyer's investment.
Remedies typically include injunctive relief to stop the violation and monetary damages for losses incurred. CaseMark includes provisions acknowledging that breaches cause irreparable harm and that the buyer is entitled to seek immediate injunctive relief without posting bond, plus recovery of attorney's fees and costs.