Non-Competition, Non-Solicitation, Non-Disparagement, and Confidentiality Agreements in M&A Deals

Summary

The buyer in an M&A transaction may seek to include various protective measures to limit the seller's ability to compete with or otherwise disrupt the target business once the transaction has closed. Such measures, which may be addressed in the acquisition agreement or in one or more ancillary agreements, include: (1) non-competition, which prevents a seller from competing with the business of the target; (2) non-solicitation, which prevents a seller from soliciting or hiring key target personnel in order to establish a competing business; (3) non-disparagement, which prevents a seller from harming the target's reputation; and (4) confidentiality, which prevents a seller from disclosing sensitive information acquired during its ownership of the target's business and prohibits the use of such information in a competing business. This type of multipart agreement is often referred to in practice (and in this practice note) as a "non-compete agreement," due in part to the relative ...