
Restrictive Covenants in M&A: Why the Sale-of-Business Label Isn't Enough
What General Counsel and Business Leaders Need to Know: Sale-of-Business Label Is Not Enough: Courts generally give sale-of-business covenants more leeway than employment non-competes, but state law varies, and the label alone does not decide enforceability. A buyer should be able to explain how the restriction's scope, duration, and geographic reach protect the business and goodwill it purchased. Where Courts Draw the Line: Recent Delaware and California cases show that courts are examining whether a restriction reaches beyond the business and goodwill the buyer actually purchased or functions more like a post-employment restraint on the seller. Litigators Belong at the Deal Table: Litigation counsel can help transactional attorneys spot overreach and anticipate the questions a judge will ask before a deal closes. Ideally, covenants should be discussed at the letter-of-intent stage, not the night before signing. In this episode of Speaking of Litigation® , Epstein Becker Green attorneys James (Jim) P. Flynn , Maurice Wells , and Kaci Hohmann discuss how courts are scrutinizing restrictive covenants in merger and acquisition (M&A) transactions, and how litigation and transactional attorneys can work together to draft and enforce those covenants. - Visit our site for related resources and email contact information: https://www.ebglaw.com/split27 . Subscribe for email notifications: https://www.ebglaw.com/subscribe . Visit https://www.speakingoflitigation.com/ . - Epstein Becker Green is a national law firm focused on health care and life sciences; employment, labor, and workforce management; and litigation and business disputes. This video is for informational purposes only and does not constitute legal advice. Viewing this video does not create an attorney-client relationship. SPEAKING OF LITIGATION® is a registered trademark of Epstein Becker & Green, P.C. © Epstein Becker & Green, P.C. All Rights Reserved. Attorney Advertising.














