CHAPTER 3 Setting Up the Deal: Key Provisions and Agreements
“No-Poach” Provisions
Protecting target employees
Through the diligence process, the buyer will get to know the target’s key employees and identify the ones who have talent or have made meaningful contributions to the target business. If the buyer does not get the deal, it may be easy for the buyer to poach choice employees from the target in order to start its own competing business. To address this concern, targets will often include a “nonsolicitation” or “no-hire” provision in the confidentiality agreement.
These provisions will often last for one to two years. A “no-hire” prohibits the buyer from hiring the covered employees. A “nonsolicit” prohibits the buyer from soliciting them for employment. An exception to the nonsolicit may allow buyer to hire a covered employee who first approaches the buyer (without being solicited) or who has already terminated his or her employment with the target. A nonsolicit also frequently makes it clear that general solicitations are permitted, such as giving a search request to a headhunter that is not targeted at the covered employees.
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