Protecting the proprietary nature of your work product through the use of covenants not to compete is vitally important to business owners and has a bottom line impact on the value of your business. The Ohio Supreme Court in Acordia of Ohio, LLC v. Fishel, 133 Ohio St.3d 356 (2012), recently clarified the question of whether covenants not to compete can be enforced post-merger. In an earlier decision, when faced with the question of whether an employee’s non-compete agreement transfers by operation of law to the new company post-merger, the Court held that non-compete agreements were not enforceable unless they contained language allowing their terms to be transferred to “successors or assigns.”
In reversing its earlier decision, the Ohio Supreme Court held that in accordance with R.C. 1701.82(A)(3) “all assets and property, including employment contracts and agreements, and every interest in the assets and property of each constituent entity transfer through the operation of law to the resulting company post-merger.”
Thus, the non-compete agreements you negotiate with your employees and/or independent contractors will survive a sale or merger and the company acquiring your business will be able to enforce the terms and conditions of those agreements. This additional factor could be a vital asset when negotiating the sale or merger of your business.
If you have any questions about this or other ways about how to protect your proprietary interests, please get in touch with L. Michael Bly, Esq., at mbly@pselaw.com or call 937.223.1130.
