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FTC Noncompete Ban Could Harm Buyers And Sellers In M&A
Flaster Greenberg – As federal and state governments consider limiting employee noncompetition agreements, the significant and detrimental impact these reform efforts will have on mergers and acquisitions is often overlooked. The Federal Trade Commission’s recently proposed rule banning noncompetition agreements is garnering the most attention. Although the proposed noncompete ban exempts certain owners selling a business, even if the restrictions may be otherwise forbidden for nonowner employees, that’s not the end of the story. Erosion of protections from competition will be factored into the purchase price by buyers evaluating the value of an entity and by sellers looking to maximize the value of their enterprise.