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Businesses can benefit from non-competes

On Behalf of | Oct 10, 2019 | Business Law

Business staff can often be a double-edged sword. A company could not survive without dedicated, hardworking employees. But those same subordinates could also be a liability if they decide to take their skills and talents to a different organization.

That is why many businesses decide to put non-compete clauses in their employment agreements. It can act as a buffer between the company’s intellectual property and its competitors. In some cases, these clauses can even help owners when they decide to sell their business.

It can be hard to start over

When a prospective buyer is looking at taking over a business, current owners may be concerned about staff changes that may occur after the acquisition. The reason is because many employees decide to leave when a company gets a new owner.

A smoother transition

Non-competes often provide stability amid a hectic switch. When employees decide to leave, the agreement limits what businesses they can work for and how long they have to wait if they choose to work for a competitor.

In the long run, this can benefit the new owner as it can decrease the time it takes the company to bounce back. An organization that can meet its bottom line during such a transition is one that holds more value.

Beginning from scratch

New owners may worry that if someone sells their business because of poor employee output, they may be stuck with current staff after the transition. However, that is not the case. If the new owner decides to start from square one, the transfer should address what will happen with current employees and whether they can legally break their non-compete agreements.