Does non-compete transfer from current client to acquiring company?
I had a non-compete clause that restricts me from doing business with my former employer's clients. I am now an independent consultant, working for a company that is not a current or former client of my former employer. However, they are about to be purchased by a larger company that is a current client of my former employer. What happens to my consulting contract?
1 answer | asked Oct 3, 2001 11:37 AM [EST] | applies to Ohio
Answers (1)
Does you non-compete speak in terms of action by you?
I have three suggestions. First, read the literal language of your non-compete. If it uses language describing actions by you that are prohibited, it may not prevent you from working for the acquiring company. That is, if it says that you shall not accept employment from a competitor, then you have not done so based on your question.
Second, if your original employer tries to enforce the non-compete, it has to show some legitimate business interest to protect. The fact that you are coming into competition with them in such a roundabout way suggests that no legitimate business interest is really involved.
Third, explore whether your current customer or the acquiring company will indemnify you in connection with a non-compete battle. It is their actions and not yours that may create a breach of your contract. However, this is a fairly extreme position to take with respect to a current customer, who can tell you to get lost altogether, but it gets at the fact that you have done nothing to make the non-compete an issue.
Best regards,
Neil.
posted by Neil Klingshirn | Oct 3, 2001 2:27 PM [EST]
I have three suggestions. First, read the literal language of your non-compete. If it uses language describing actions by you that are prohibited, it may not prevent you from working for the acquiring company. That is, if it says that you shall not accept employment from a competitor, then you have not done so based on your question.
Second, if your original employer tries to enforce the non-compete, it has to show some legitimate business interest to protect. The fact that you are coming into competition with them in such a roundabout way suggests that no legitimate business interest is really involved.
Third, explore whether your current customer or the acquiring company will indemnify you in connection with a non-compete battle. It is their actions and not yours that may create a breach of your contract. However, this is a fairly extreme position to take with respect to a current customer, who can tell you to get lost altogether, but it gets at the fact that you have done nothing to make the non-compete an issue.
Best regards,
Neil.
posted by Neil Klingshirn | Oct 3, 2001 2:27 PM [EST]
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