In reply to: It’s been the law in California for 150 years. posted by Kali4niaND
As a result, I believe noncompetes in M&A transactions will continue to be enforceable. I also understand that the new rule does not prohibit nonsolicitation provisions (a common restrictive covenant preventing a person from soliciting customers or employees of his or her former employer).
I also agree with you that if noncompetes become unenforceable in M&A, then the value of a seller's business will be diminished. This is especially true in a service business like medical or dental. Seems like a double edged sword for the doctors.
It should be obvious, but none of this is legal advice.
Lack of non-solicitation agreements / clauses would very much disrupt the M&A market as well. It's very difficult to protect a newly acquired asset if it can be cannibalized shortly after transfer.
I understand the justifiable complaints of people in the medical and financial fields that they should have the right to have customers/patients from their former place of work, since they are following the person who provided them service in the past.
The tech field offers the possibility of a group of workers in the same field offering a lower cost alternative (due to smaller overhead) to their currrent employer. It's especially bothersome if these workers use technology developed by others (i.e. they're selling the product of others rather than a product they developed). I've seen threats of this in specialized fields or field sites. In many of these cases it's more than a wage issue.