Non-compete obligations are “must-haves” in many M&A transactions. But one wants to be precise.
While there is a strong case for preventing founders and management from setting up competing businesses, the case is much weaker for restrictions on institutional investors who wish to invest in the same sector.
In fact, only 3% of the over 600 shareholders’ agreements (dated between 1996 - 2020, covering more than 60 jurisdictions) that MARTINI has analysed include investor non-competes (excluding JVs).
An investor non-compete usually expires upon exit (42%) or 12 months from exit (10%). Almost no investor non-compete survives longer than 3 years.
However, we found little correlation between the prevalence of an investor non-compete and factors such as jurisdiction, industry or size of the stake.
While you are here: we are analysing thousands of investment agreements while developing MARTINI. Curious what the market practice really is? Ask your question now (it takes a few seconds and is free): https://lnkd.in/gWc6XzD
A physicist turned data scientist. Tom is a PhD researcher with a decade of experience in theoretical and applied research. Formerly a research scientist at the University of Munich and the Agency for Science, Technology and Research of Singapore.