I sold my 12 person landscaping company in March. The APA had a non-compete that I thought was straightforward , 3 years, 50 mile radius. I stayed out of the area, but last month a former client tracked me down and asked me to do a one-off install at their new property. I said no because of the agreement. Now I'm second-guessing whether I even needed to. My closing attorney never really dug into the enforceability or how the radius is measured. Has anyone had a lawyer look at this stuff after the deal closed? What did you learn?
Non-Compete
Why reviewing non-compete rules with a lawyer post-closing helps
Post-closing review is usually cheaper than people expect, and it saved a friend of mine from a nasty letter. In his case the defined radius was measured from a location that no longer existed, so the whole clause was ambiguous. Worth a couple hundred bucks to get a memo.
Not a lawyer, so take this for what it's worth. But a 50-mile radius on a Landscaping business strikes me as potentially overbroad. Courts vary. You need someone licensed in your state to tell you if that radius is likely to be blue-penciled or thrown out entirely.
what did the purchase agreement actually say about the radius? from the business address or from your personal residence? that detail alone can shrink the restricted zone by miles.
It says from the principal place of business. Which was the yard I leased. But the buyer didn't renew that lease after closing. So the address is now a vacant lot.
That's exactly the kind of thing a post-closing review catches. If the defined point is gone, the buyer may argue the radius still applies to the geographic area. But a lawyer can tell you whether the ambiguity gets construed against the drafter, which would be them. Also check whether the agreement has a severability clause. If the radius is unenforceable, does the whole non-compete fall or just get trimmed? That changes your risk a lot.
My situation was different but the lesson was the same. I signed a non-solicit that I assumed only covered active customers. The buyer later claimed it covered anyone who had ever been a customer. I spent three months arguing about it. A 45 minute call with an employment lawyer before I took any new work would have ended that that in week one.
Out of curiosity, did the buyer give you any consideration earmarked for the non-compete? Courts in some states care a lot about whether it was separately bargained for versus just boilerplate buuried in the APA.
One more thing. If a former client is already reaching out to you, that means word is traveling. Even if your non-compete is weak, the buyer could still send a demand letter that costs you more to fight than to avoid. Getting the review done now establishes your position before any demand lands.
agree with the above. document the client contact, your refusal, and the date. neutral records are the thing you want to have if this ever escalates.