What Happens to a Non-Compete After a Merger?

Many employees wonder, “If I sign a non-compete contract with a company, and later, the company is purchased by a different company, is my non-compete null and void?”

Maybe. It depends on the terms of the employment contract if a non-compete survives the merger.

The answer can be found in the contract itself. Look for an assignment clause. Is there any language explicitly assigning the rights and responsibilities in a non-compete contract to an “successor entities,” i.e. the new company? If so, then the non-compete will probably be enforced. If not, then you may have an argument to invalidate the non-compete and join a competitor.

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

An experienced non-compete lawyer can help evaluate the scope of a non-compete in a merger.