Seller non-compete
What can I do after I sell my business?
Also called: Restrictive covenant · Non-solicitation
Favours the drafting party
What it does
Protects the goodwill the buyer has paid for by restricting the seller's activity for a period, within a defined scope and geography.
Why it matters
Sale-of-business covenants are treated far more permissively than employment covenants in most jurisdictions, because the seller received consideration for the goodwill. That means the drafting matters more, not less — a broad covenant here is more likely to hold.
What to watch for
- Duration longer than the goodwill it protects plausibly lasts
- Geographic scope untethered to where the business actually operated
- Activity scope reaching businesses the seller never conducted
- Non-solicitation extending to passive applicants and general advertising
- Restrictions binding family members or affiliates the seller does not control
What to ask for
- Duration and geography matched to where and how the business actually traded
- Activity defined by reference to the business as conducted at closing, not as it might expand
- A carve-out for passive investment below a stated percentage
- General-advertising and inbound-applicant carve-outs in the non-solicit
- Release if the buyer materially breaches, or fails to pay the earnout
What agreements actually say
Seller non-compete duration
Not enough data yet. Found in 17 agreements from 17 distinct filers, below the 20-filer floor for publishing a figure. Counted by filer rather than by document, because one agreement is filed many times and repeat filings of a single deal are not twenty agreements.
How to read this. These describe agreements that USE THIS PARTICULAR LANGUAGE and are filed with the SEC. They are not a random sample of deals, and EDGAR is public companies only. Read as 'among agreements using this formula, the median is N' — never as 'the median deal'. Window: 2016-01-01 to 2025-12-31. Method: For each metric an exact formulaic phrase selects documents that contain the provision, and a deterministic regex anchored on that phrase extracts the value. No model is involved, and every observation behind a published figure is retained with its matched text and source URL so any number here can be checked or falsified.
How common is it
Documents filed with the SEC containing the exact phrase “covenant not to compete”.
View as a table
| Year | Documents |
|---|---|
| 2019 | 1,073 |
| 2020 | 1,077 |
| 2021 | 1,302 |
| 2022 | 1,219 |
| 2023 | 1,016 |
| 2024 | 882 |
| 2025 | 837 |
Real filings using it
- Walmart Inc. (WMT) (CIK 0000104169) — 8-K, 2025-11-14
- Walmart Inc. (WMT) (CIK 0000104169) — 10-K, 2023-03-17
- NIKE, Inc. (NKE) (CIK 0000320187) — 10-Q, 2025-01-03
Source: SEC EDGAR full-text search (efts.sec.gov). Retrieved 2026-08-30. Counts are filed documents matching an exact phrase, not deals, and EDGAR indexes public-company filings — read these as public-company practice, not as evidence of what private mid-market agreements contain.
What usually gets agreed
Three to five years is the usual range in a sale of business. Scope carve-outs for passive investment and general advertising are commonly agreed; releasing the covenant on buyer breach is a harder but reasonable ask.
Related
- Earnout — Part of the price, payable later, contingent on the business hitting agreed targets.