Seller started a competing business 4 months after close

searcher profile

May 12, 2025

by a searcher from Louisiana Tech University - College of Business in Houston, TX, USA

I purchased a business from a seller with a 10% seller note and remainder financed with an SBA loan. The purchase agreement stipulated 4 years non compete and non solicitation. 4 months later seller starts a new business to compete with me and now I discovered that my employees have been contacted by him to join him. One has left to join him to date. Has anyone dealt with this? What are my legal options? The 10% seller note is subordinated to the SBA and payment doesn't start for another 2 years. Am I still obligated to pay him when he has not honored the PSA?
1
25
399
Replies
25
commentor profile
Reply by an intermediary
in Campbell, CA, USA
Get a lawyer to get a judge to issue an injunction to stop the seller dead in his tracks and whatever else he/she can do. Then, bring in the big guns - Inform the SBA lender, who has a stake in this, so they can get their legal team involved.
commentor profile
Reply by a professional
from Georgetown University in Maryland, USA
I have seen this a few times and we have litigated this a few times. You should retain an M&A litigator ASAP - depending on your agreement, this should be an indemnifiable breach of covenants. Even if not, you should aggressively go after the Seller because this will destroy your business. If you would like to discuss, please reach out to me at redacted and I will connect you with our Litigation head.
commentor profile
+23 more replies.
Join the discussion