In reply to: When the company relies on the magnetism of one person posted by KeoughCharles05
is not all that valuable unless the company has the owner in an employment contract -- that contract is where the negotiation should be, and contemplation of liquidated damages seems appropriate in these cases moreso than a prohibition against competing whenever the owner actually departs.
There are plenty of circumstances where a company is perfectly viable following an owner's (or co-owner's) departure, provided the former owner himself isn't out there competing.
And in the owner context, the problem isn't keeping him from departing (who, exactly, is the owner going to make that promise to whilst he's still the owner), it's keeping him from changing his mind after he voluntarily decides to depart.
for the business and structure the buyout differently, rather than shackle with a noncompete. It can achieve the same ends via different means.
Owner buyouts in small businesses aren't usually adhesion contracts drafted by the buyer.
Edit: And it's wishful thinking to assume that structured payouts will generate the same protections as a restrictive covenant in every case. If the seller concludes he can undersell his old firm, it could certainly be economically rational for him to get back in the game and forgo the later installments. Whether he can do that consistently with tort law and the Lanham Act depends on the circumstances, but contracts allowed parties to avoid a lot of indeterminability and uncertainty on those questions.
by this on multiple occasions, and my spouse has been on both sides of it.
I am not understanding why a buyer of a small business might not be able to structure the buyout in such a way to protect their interests rather than including a non-compete clause. If you care to explain it in simple terms so that I can follow along I will be happy to learn. That's not snark, I really would be happy to be enlightened.