Noncompetes

Based on the most helpful WSO content, non-competes can vary significantly depending on the structure of your relationship with the firm. Here's how it generally works in the scenarios you mentioned:

1. Working as an SPM (Senior Portfolio Manager) at MLP:

   • If you're an SPM directly under MLP, you are likely subject to a standard non-compete agreement. These agreements typically restrict you from joining a competitor (like Citadel or Point72) for a set period, often between 6 months to 1 year.
   • The enforcement of non-competes can depend on factors like your role, the value of proprietary knowledge you hold, and the firm's discretion. For example, quant roles often face stricter enforcement compared to discretionary roles.

2. Being "seeded" by MLP as a sole LP with a separate entity (e.g., "XYZ Capital"):

   • In this setup, you may have more independence, including the ability to raise outside capital and potentially spin out. However, the terms of your agreement with MLP will dictate what happens if they pull their capital.
   • If MLP withdraws its capital, it could impact your ability to attract or retain other investors, depending on how much of your fund's credibility or operations rely on MLP's backing.
   • Whether this triggers a non-compete depends on the specific terms of your agreement with MLP. If MLP has a clause tying your entity to their non-compete terms, you might still face restrictions on moving to competitors like Citadel or Point72. However, if your entity is structured to operate independently, you might have more flexibility.

In both cases, the specifics of your contract with MLP are critical. Non-competes are often tied to the legal agreements you sign when joining or being seeded, and they can include clauses about arbitration or other dispute resolution mechanisms. Always consult legal counsel to fully understand your obligations and options.

Sources: How do non-competes work when you want to quit?, Citadel vs. Millennium vs. Point72 vs. Other Multi-Managers, Sponsor vs LP, Leaving for another fund - How to deal with current employer?, https://www.wallstreetoasis.com/forum/private-equity/qa-non-target-top-bucket-ssg-private-creditdirect-lending?customgpt=1