Curious how entire teams get lifted from one fund to another as pretty much all employment agreements I’ve seen have restrictive non-solicits. Does anyone know the mechanics of how platforms pull entire teams from other platforms? Or do can they typically only pull the PM and then the PM has to build the team again from scratch?
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It’s not about what happened it’s about what you can prove
who’s to say the more junior members didn’t ask the senior leader if they could come too?
I've seen it a few times and have been recruited by a former colleague to join a competing firm. The person used an employment lawyer at the onset of joining and was able to structure very loose language around non-solicits in the employment agreement. Person had been with the firm for 6-7 years and the underlying employment agreement had never changed - salary raises were done via an addendum to the original EA.
When it does happen, its pretty common to see the original company file a lawsuit to stop it but depending on how the non-solicit language reads, it usually has no teeth.
If you are being recruited or trying to recruit former colleagues, I would recommend consulting with legal counsel first.
The contract aside, depending on management and the terms of departure, some firms will waive. Typically can only pull PM imo.
Gotcha - assuming that the PM hired the team and likely will just fire the team after the PM leaves, would firms just not waive the non-solicit clause out of spite?
Nah think they would only not waive if they intend to reallocate the team
I've tried to do this myself a few times, unfortunately never worked out but not due to legal reasons.
Multi-managers (MM) - while I don't know all employment agreements out there, there are quite a few that limit the non-solicit to only 6 months. So you're on the beach for 6 months and then you/your team joins a new fund. There's been a push to extend this to 1 year at a few MMs but that also depends on pod GMV. Specifically with poaching (which may or may not have a time constraint), most times when the PM leaves, the entire team is fired and its easier for them to move on. Firing doesn't waive constraints, but there is often an offered reduction/limit in them when you're fired in exchange for signing a letter that removes any ability of you to sue your former employer for wrongful termination and such. There is a lot of strong employment case law on what your firm can/can't do with your employment constraints (esp on poaching) if you're fired. NYC employment law is massively on the employee side. If you've been to a MM and were fired, good luck in having the MM enforce anything!!!
Single managers (SMs) - much easier, there are funds out there that are open to backing a team that lifts out from a SM not including the CIO. The pitch is that the core team has been there a long time, has contributed most of the alpha. You obv would need to document this by breaking out the trades the team leaving has contributed vs the CIO/team not joining the lift out.
Happy to exchange thoughts with anyone going through this..
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