Non-Compete Addendum (APA) Template

NON-COMPETE ADDENDUM (APA) TEMPLATE FAQ

What is a Non-Compete Addendum to an Asset Purchase Agreement (APA)?

A Non-Compete Addendum to an APA is a separate document that sets out how, where, and for how long the seller (and sometimes its owners or affiliates) agrees not to compete with the business being sold, and may also restrict solicitation of customers or employees after closing.

When is a Non-Compete Addendum used in an asset deal?

It is commonly used when the buyer wants protection for the goodwill, customer relationships, and confidential information it is purchasing. Instead of or in addition to clauses inside the APA, the parties sign this addendum to clearly define non-compete, territory, and non-solicitation terms.

What does a Non-Compete Addendum usually include?

A clear non-compete addendum usually defines the restricted activities, the type of business covered, the geographic territory, the duration of the restrictions, any non-solicitation obligations, exceptions for permitted activities, remedies for breach, and how this addendum fits with the main APA.

How long can a non-compete last?

Acceptable non-compete duration depends on local law and the type of deal. Some laws allow longer periods in connection with the sale of a business than in employment contexts, but courts often require that the time, territory, and scope be reasonable. Parties should check local rules and get legal advice before finalizing restrictions.

Is a non-compete the same as a non-solicitation clause?

No. A non-compete restricts engaging in a competing business or activity, while a non-solicitation clause focuses on limiting the solicitation of customers, suppliers, or employees. Many asset deals use both, with non-compete protections for core business activities and non-solicitation protections for key relationships.

Can AI Lawyer help me customize this Non-Compete Addendum (APA)?

Yes. AI Lawyer can help you tailor this Non-Compete Addendum with your party names, APA reference, restricted business, territory, and duration so you have a clear, organized document ready for review and signature.