Title really says it all - curious what the standard noncompete provision is in private equity at the Principal level. I know they're essentially unenforceable in NY anyway, but nevertheless curious what folks have seen. Also curious if it is typical for you to receive pay during the full non-compete period.
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Don’t know about PE, but what I will say is don’t just think about enforceable vs not, think about how a potential future employer will view it. Many firms will ask if you have non competes and then run a risk assessment on their side about whether or not they want to deal with the potential headache. The more your firm fights these and the longer they are, the less likely a firm will want to deal with this (and regardless they will prefer a candidate without a non compete to one with). So while legally there are always avenues to argue against these and potentially get your way, the additional blocker is other firms have to be willing to want to put up with that.
Completely agree, that's why I'm still curious what market is - all else equal, if everyone else has 3 month noncompetes and I have a 6 month noncompete, I may not be worth the hassle unless I'm wildly amazing, which I am probably not.
Varies obviously but 6 months is fairly standard from my understanding. How much a firm tries to enforce it depends on a multitude of factors, but generally it’s not worth the fight if the situation is relatively amicable and the person is not leaving for a clear and obvious competitor (e.g. Summit to TA or vice versa probably more problematic than BX to random LMM fund). As poster above said, issue is less about legal enforceability and more about perception + risk of firm dragging out a fight.
Firm almost always pays you for time you have to sit out. Some jurisdictions require it by law.
I never had a non-compete in the US. It almost definitely wouldn’t be enforceable anyways. That said, Entendu got it right: Expect non-compete to equal your severance period. But be warned, while this might sound great, severance will be based on your salary (excl. bonus) and you won’t be vesting carry during this time either. So basically, at the higher levels of PE, you’re making substantially less while collecting severance and waiting out your non-compete.
Data point from a NY MF / UMM firm:
Partners - 12 months
MD - 9 months
VP / Principal - 4.5 months
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