1. I think you are confusing a non solicit with a non compete
  2. 5 years is really long, however
  3. If they are asking you to sign this before you leave (and it wasnt entered into at the start), they need to offer you new consideration for it to even have a chance of holding up in court
  4. Aside from the time horizon, the restrictions are very broad

In short there seems to be no reason for you to sign it. And if they try and withhold stuff from you which you've rightfully earned, hire a lawyer.

 

I initially thought the same thing but the fact that he cannot "perform services for" essentially makes them one in the same. I can't imagine this is a NY firm given how unorthodox the scenario. I had to sign a bunch of releases as part of a severance package when we mutually parted ways but I don't see how an employer could make you sign anything if you resign unless there was a pre-existing signed contract with a non-compete/non-solicit. Very strange at the junior level.

 
junkbondswap:

I initially thought the same thing but the fact that he cannot "perform services for" essentially makes them one in the same. I can't imagine this is a NY firm given how unorthodox the scenario. I had to sign a bunch of releases as part of a severance package when we mutually parted ways but I don't see how an employer could make you sign anything if you resign unless there was a pre-existing signed contract with a non-compete/non-solicit. Very strange at the junior level.

You're right, that "perform services for" could be a catch all.

And your latter point is spot on. Generally if a firm tries to add on restrictive covenants after you are already employed there, they need to offer you some additional consideration (Ie more salary, bonus, negotiated severence, etc...).

 
Best Response

Yeah - lawyer up. Not going to lie, it's your best choice. This way you can have a lawyer review the agreements and make sure that they aren't overly restrictive. 5 Years is excessive and the agreement, at least as you present it, prohibits you. if I'm reading this right, from doing anything in Private Equity to the point where it interferes with your ability to seek work in your field or in other financial service roles given the potential for any such company to engage in private equity. The people you are leaving will hate it, but this way you walk out ahead and have few restrictions on what you can do. What will most likely happen is the agreement will be in place but the length of time will be significantly reduced in order to make it more appropriate and within the scope of the law.

 

The whole thing in quotes is just wrong, for lack of a better word. I'm assuming that "PE" is defined as the current PE firm. He can't "perform services for or enter into any transaction with..." basically anyone because the "...business relation of PE..." and "....indirectly competes with the business of PE..." potentially includes anyone, and really almost everyone in the world (not just other PE firms or investors-the "potential" in front of "investee" can carry through to "business relation"-it's very poorly written legally-these terms should be defined in the beginning of the agreement and capitalized in the doc), who was not explicitly listed previously. I'm not a lawyer and especially not an employment lawyer (although I've read metric tons of legals docs over the years) but I'm pretty sure this could be construed that the ex-ee would not be able to seek employment at a dog house manufacturer if one of their portfolio companies supplied nails to it or a competitor dog house manufacturer, or if they previously bid on a nail company. This will exceed the scope allowed by any non-compete and the duration is just outrageously long so the agreement would most likely not be enforced by a court, but that's a state by state issue.

As others have stated, an employee needs to receive consideration for a non-compete so the OP better be getting a damn huge package if the firm is even throwing any type of agreement out there, let alone this. Generally courts will only find for the employer to protect IP, trade secrets or from directly stealing clients and must compensate an employee to not work in the business for a reasonable amount of time (not five years). And it varies state by state. CA, for example and based on my experience, is the most ee friendly and non-competes are illegal. You just can't steal IP, and staplers.

So, to make a short story long, this non-compete is most likely unenforceable BUT, depending on your state, a future potential employer could see it as a reason to not hire you simply for the headache of having to make it disappear and the fact that a potential employee would sign something like this.

Consult a lawyer.

 

What's in it for you to sign it? If nothing, don't sign it. If little, don't sign it anyway.

Did you ask them where this was coming from? I would ask them for full salary and bonus for the length of the period they would like to enforce this restriction and happily sign if they agreed.

This is something that would never stand the test of law. Or, just move to a state that doesn't recognize these things (I believe California and MA, but not sure).

I agree with the others to consider getting a lawyer.

 

Hi guys, for clarification, in the beginning, the PE name has been defined. But, there is no definition of potential investor or potential investee. Another thing is, although this falls under non-solicitation, the content covers that of non-solicitation and non-compete. Thanks for your inputs!

 

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