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M&A Restrictive Covenant Agreement review

Sale-of-business non-compete / non-solicit covenants, governed by state goodwill doctrine (e.g. Cal. Bus. & Prof. Code § 16601). The FTC Non-Compete Clause Rule, whose § 910.2(a)(2) would likewise have preserved them, was set aside nationwide in Ryan LLC v. FTC and never took effect.

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What it checks

Sale-of-business identification (goodwill nexus)

Restrictive covenants must be tied to the sale of a business to qualify for the state-law sale-of-business exceptions (e.g., Cal. Bus. & Prof. Code § 16601).

Critical · MNA-072

Non-compete duration stated and bounded

Non-compete duration should be stated and within enforceability norms (typically 2–5 years for M&A sales).

Critical · MNA-073

Non-compete > 5 years flagged

Reasonableness of a sale-of-business non-compete is fact-specific; longer terms are enforced where tied to the goodwill sold.

Warning · MNA-074

Geographic scope stated

Non-compete must specify geographic scope.

Critical · MNA-075

Activity scope (Competing Business defined)

Non-compete must define what counts as Competing Business.

Critical · MNA-076

Non-solicit of customers

Non-solicit-of-customers covenant should be present.

Critical · MNA-077

Non-solicit of employees

Employee non-solicit (no-poach) should be present.

Critical · MNA-078

Blue-pencil / reformation clause

Restrictive-covenant agreement should empower courts to reform overbroad terms.

Warning · MNA-079

Equitable relief and remedies

Damages are usually inadequate; agreement should authorize injunctive relief without bond.

Critical · MNA-080

Every run also applies 120 general checks that belong to any agreement: structure, parties and signatures, defined terms, cross-references, dates, amounts, and one-sided terms.

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