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[Teddy Murphy]

Exactly what Mark C.  said.  We got it worked out.  He owns several other businesses and is getting up in age and wants out of owning the production side.  He still wants to freelance and do some video recording. 

[Scott Holtzman]

Distilling it down, "he agrees to not deny you business/revenue by competing with you" in exchange for value received, namely the money he gets for selling his business to you. Depending on the nature of your/his business this can also be limited geographically.

Why is he selling? What does he want to do? If he wants to get back to what he was doing before a non-compete will be the hard way to prevent him. 

JR

As in any contract consideration must be provided by both parties.  A portion of the sale must be allocated to the non-compete.  Then the contract at least has merit and is not void on the surface due to lack of consideration.

There are also tax consequences as to how non-competes and good will funds are allocated.  Someone usually sells a business because they want to get out of it, not go right back in.  That alone would red flag me.

From a tax perspective a basic asset purchase has always been more favorable for me.

This is advice from someone who has ran and acquired businesses for 30 years it is not legal advice.  Merely talking points for you to discuss with your attorney.

[Richard Turner]

Generally most non competes come down to a gentleman's agreement anyway.

How big of an area and how much time are you looking for?
your town, county, state?
six months, a year, lifetime?

are you looking for the seller to never work in the industry? never own controlling share in a similar company? never teach what he knows?

Generally 2 years and not in same region is usually fair to both sides.

Just  guess you are likely buying some dated equipment and an existing customer base? If you aren't keeping the seller on for a transition period what value are you getting over having all new stuff and having him ride off into the sunset and close up shop in his own time frame?


Just some points to ponder, possibly far off base.

[Matt Vivlamore]

Why not bring him on as a Manager or Something?

[Teddy Murphy]

He is staying on temporarily during the change over.  He agreed to two years in our specific area.  As I said before, he has several other businesses that he wants to devote his time to.  Including a guitar store (can't say music because our territory doesn't move drums or PA equipment that doesn't say Peavey on it, don't ask why, we don't know.  It's backwoods USA.) His gear is fairly new and good trucks come with the deal.  He is giving me his contacts and when he comes on during the transition, he has agreed to take me to meet his clients, even though I know most of them from all of the shows that I subbed for him last year, I just never introduced myself as owning my own company, just that I was there to do the show for him.  I truly believe that he doesn't want back in anytime soon because he is investing the money into buying a new facility for his boutique guitar shop since his current one has now been classified as being in a flood plane.

[claude cascioli]

for starters make sure you know the guy well enough and be sure that the accounts are still in place. legal or not a contract is a contract . just let the seller know that you want him and have his lawyer  meet with your lawyer and make clear to your lawyer what you want. also get in touch with the reps you deal with let them know you brought his company this way that rep wont sell to him as easily.also it wont hurt if your lawyer knows the local judges 

[Steve M Smith]

legal or not a contract is a contract

Not sure how it works where you are, but over here under English law, a contract which requires an illegal act is invalid.


Steve.

[Scott Olewiler]

Not sure how it works where you are, but over here under English law, a contract which requires an illegal act is invalid.


Steve.

In this case, I believe the term "legal" (incorrectly) refers to whether a lawyer wrote it up or not. Is a classic misnomer; as all signed contracts, even those written without a lawyer's involvement are legal and binding.

[Steve M Smith]

In this case, I believe the term "legal" (incorrectly) refers to whether a lawyer wrote it up or not. Is a classic misnomer; as all signed contracts, even those written without a lawyer's involvement are legal and binding.

Even when one or more terms is not lawful?


Steve.

[Jamin Lynch]

Even when one or more terms is not lawful?


Steve.

No contract can force someone to knowingly commit an illegal act.

But a signed contract is a legally binding agreement between two parties whether written by an attorney or not.

[ProSoundWeb Community]