SALES AGREEMENTS/NON-COMPETES – ACQUISITIONS
At the recent NAPL Mergers & Acquisitions Workshop in Chicago one of the topics discussed was the need to have key sales personnel on board prior to the deal being consummated. If the Acquisition is structured as an Asset Purchase, none of the Acquired Company’s contracts will be transferred to the Acquiring Company.
One of the attendees commented that he did not get Non-Competes from the existing key salespeople prior to closing. The day after the closing a key sales individual resigned and this resulted in a loss of almost 50% of the Acquired Company’s revenues. As you can see, it is critical to have this resolved prior to the closing, no one wants surprises like this, especially one day after closing. If the salesperson refuses to sign a Non-Compete Agreement you can at least assess your risk and make the appropriate adjustments.
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