What Happens to a Non-Compete After a Merger?

Many employees wonder whether non-compete agreements are enforceable if their employer merges with or is acquired by a different company.  It depends on whether the terms of the contract contemplate surviving a change in control of the employer’s business.

The answer can be found in an assignment clause contained within the contract. The language in an assignment clause often addresses whether rights and responsibilities under the contract can be assigned to successor entities. If your non-compete contains this type of language, then the non-compete is probably enforceable. If not, then you may have an argument against the enforceability of your non-compete agreement.

Under Virginia law, employers and employees should be especially careful about non-compete matters in the context of mergers and acquisitions. Not every contractual term survives a merger, unless the contract contemplated assignment rights.

An experienced non-compete lawyer can help you evaluate the scope of your non-compete agreement after a merger or other change in corporate control.