Parties in mergers and acquisitions have long relied on non-compete agreements to "put handcuffs" on the seller, according an industry veteran who has been on both sides of M&A deals.
A non-compete is so essential to the transaction that it falls under the category of "Deal 101," said William Kronenberg, chairman of Professional Underwriters Corp. in Exton, Pa., during a panel discussion at the TMPAA's Eighth Annual Summit last month.
In fact, even if the principal agrees to stay after the acquisition, it's still a good idea to keep him "tied up" in some way, such as restricting his sales activities to a product line or niche, he noted. If the seller's principals are staying, it's also important to establish upfront what their day-to-day responsibilities will be, he added.
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