Our key managers do not currently have non-compete or non-solicit agreements in place. How do we introduce these restrictive covenants during our exit runway without making them suspicious or causing them to demand immediate raises?

Question

Tyler Smith · Accepted Answer

A buyer will not pay premium multiples if your core management team can walk out the door the day after the sale and start a competing business down the street. You must secure non-compete and non-solicitation agreements from your key players before you enter the market. Do not roll these agreements out in a panic or as a sudden demand. Instead, align them with your annual compensation reviews or performance bonus cycles on your exit runway. Frame the agreements as a standard modernization of your corporate governance and protection of the company's proprietary systems. To make these agreements legally binding and palatable to your team, you must offer clear consideration. This means tying the signature to a meaningful upside, such as an updated long-term incentive plan, a stay bonus, or a promotion to a new seat on the Accountability Chart. By tying the restrictive covenants to positive career advancement and financial incentives, you turn a potentially defensive conversation into a mutual commitment. Your key leaders will feel valued and secured, and you will present a locked-in, low-risk leadership team to prospective buyers when due diligence begins.