Non-compete agreement
A non-compete stops a business seller from competing with the business they sold for a defined time and area, protecting the goodwill the buyer paid for
A non-compete, or non-competition covenant, is a promise by the seller of a business not to start or join a competing business within a defined geographic area for a defined period after the sale. It usually sits alongside a non-solicitation clause, which stops the seller from approaching the customers, suppliers and staff of the business they sold.
When a buyer pays for goodwill, they are paying for customers who will keep coming back. If the seller could open up down the street the following month, that goodwill would be worth nothing, which is why lenders and buyers in BC treat the non-compete as a core term and why its scope affects the price. Reasonable scope matters: a clause that is too broad in time or area may be hard to enforce, and your lawyer advises on what is appropriate.
In practice the negotiation is about duration, territory, the definition of a competing business and what the seller is still allowed to do, such as consulting in a related field or holding a passive investment. Sellers who plan to stay active in the industry should raise this in the letter of intent, not at closing. We handle the commercial terms and the trade-offs against price and transition, and your lawyer drafts and advises on enforceability.
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.