Does a noncompete agreement hold up after an acquisition?

You sign a noncompete agreement when joining a company, knowing that it limits the scope of your work outside of that company but also thinking that you are probably never going to leave anyway. This is a dream job.

Then the company gets sold to another company. After the acquisition, it’s not a dream for you anymore. You want to move on. Are you still bound by that noncompete agreement? Do you still have to honor it even though the people you originally signed it with are gone?

There’s no easy answer here because every situation is different. For one thing, it depends on the type of acquisition. Does the original company still exist and run in basically the same fashion, even though hands-off ownership is technically different? Maybe another company just bought stock and technically now owns your company, but nothing else has changed.

If so, you probably still have to honor the agreement.

Or, did the acquisition really happen more like a merger? Your old company is functionally gone; it was absorbed to some degree into the new company. You see massive changes in the workplace. You essentially work for a new employer.

If so, then you may not have to honor it. It depends if they have some other evidence that you consented to it when the merger took place or if there is a clause in your original agreement saying that it can be assigned to the next company. If they don’t have that, you may be able to break it.

The whole situation can get very complex. It is critical that you understand all of your legal options.

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