Ana Calves, with Kleinbard. Courtesy photo Alternatives to Restrictive Covenants in M&A Transactions
While restrictive covenants in the M&A context are not the primary focus of this ban, given the uncertainty in the current legal landscape and the potential hurdles to enforcement, buyers would be well-advised to find other ways to incentivize sellers not to compete with a target company after an M&A closing.
September 06, 2024 at 11:51 AM
6 minute read
Buyers in M&A transactions have long used restrictive covenants limiting the post-closing conduct of sellers of businesses to protect the value of their investments. In recent years, however, restrictive covenants have come under increased scrutiny from courts and government agencies, culminating in the Federal Trade Commission's noncompete ban in April 2024, which is currently being litigated in multiple jurisdictions.
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