Non-Compete Question

by a searcher from Harvard University

2 years ago

Question for the community on Non-competes.  

Here's the scenario:

•	There are 4 owners (equity holders in the biz).
•	Only one of them works in the biz, and is the CEO / head "chef", so to speak.
•	One of them is the father of the CEO (well past retirement age), and the other 2 are investors - they are not "chefs".
•	I would be paying a premium multiple (2x Sales, I know, I know, don't get me started) for the business.
•	I want the CEO to signa non-compete.
1.	But - do you have the other 3 owners sign a non-compete?
2.	Would you compensate each to not compete in this scenario, given the premium multiple?

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5 comments

professional from University of Richmond

If this is an SBA-funded deal the SBA will likely require all 4 to sign the restrictive covenants.

2 years ago | like reply | 0 likes

searcher from American College of Greece

All 4 should sign it.

2 years ago | like reply | 1 like

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