Non-competes can literally constitute the primary value of certain types of companies, by protecting trade secrets and confidential information as well as preventing key employees from competing with the company in either a narrow or fairly broad marketplace niche depending on the situation.
In order to be enforceable, however, they must be "reasonable" in all respects in light of the facts and circumstances of both your company and the particular employee's personal situation; otherwise, they will likely be thrown out or severely limited by a court. Nevertheless, contrary to rumor and supposition, they are very enforceable if well drafted. Signing one carelessly can virtually cost an employee their career in that industry for all practical purposes. Having a non-compete in place for each key employee can result in a company being worth multiple times what it might be otherwise to a prospective purchaser of the business; whereas lack of a non-compete or an inadequate one can literally destroy the value of a company to a prospective purchaser.
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In order to be enforceable, however, they must be "reasonable" in all respects in light of the facts and circumstances of both your company and the particular employee's personal situation; otherwise, they will likely be thrown out or severely limited by a court. Nevertheless, contrary to rumor and supposition, they are very enforceable if well drafted. Signing one carelessly can virtually cost an employee their career in that industry for all practical purposes. Having a non-compete in place for each key employee can result in a company being worth multiple times what it might be otherwise to a prospective purchaser of the business; whereas lack of a non-compete or an inadequate one can literally destroy the value of a company to a prospective purchaser.
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 Gary Jacobson, JD |
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