What Is a Non-Compete Clause For An MSP Owner?

A non-compete clause is a legal provision that is often included in a contract or agreement between two parties, in which one party (often an employee or contractor) agrees not to compete with the other party for a certain period of time after the completion of the contract.

As a Managed Service Provider (MSP) owner, you may be considering buying another MSP business (or selling yours) and looking to protect your interests after the sale. One way to do this is to include a non-compete clause in the purchase agreement. This clause will prevent the seller (or buyer) from using confidential information learned during the sale and during their time working with you, to directly compete with you, by starting a similar business in the same area or with the same customers.

When crafting a non-compete clause, it’s important to consider the specific needs of your business and the potential risks of competition. For example, you may want to include a geographic restriction to prevent the buyer from operating in the same city or region as your business. You might also want to include a restriction on the types of services offered, so the buyer cannot directly compete with your core services.

It’s important to note that, non-compete clauses can be difficult to enforce and may be considered unenforceable if they are too broad or restrictive. To increase the chances of a court enforcing the clause, it is crucial to make sure the terms are reasonable and necessary to protect the legitimate business interests of the company.

When crafting a non-compete clause in the context of a business sale, it is important to work with a qualified lawyer with experience in both business and employment law to help ensure the clause is legally enforceable.

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