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The discussion addresses enforcement challenges involving labor rights regulators and state law limits, while outlining enforceability requirements such as bona fide covenants, reasonable length, and appropriately tailored geographic and activity scope. The materials also cover related deal structures (non-solicitation and confidentiality) and the tax treatment, including amortization under Internal Revenue Code Section 197 and IRS Form 8594 reporting requirements.",{"@graph":63,"@context":118},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":11,"@type":70,"position":76},"https://docshare.wps.com/template/presentations/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/noncompete-agreements-in-business-transactions-presentation/282136/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/noncompete-agreements-in-business-transactions-presentation/282136.png","ImageObject",442,249,{"name":88,"@type":89},"Aria","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-10-27","2026-09-16",true,{"@type":98,"interactionType":99,"userInteractionCount":8},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114],{"name":105,"@type":106,"acceptedAnswer":107},"What is a noncompete agreement in a business context?","Question",{"text":108,"@type":109},"A noncompete agreement is a contract that restricts an individual from accepting future employment or operating a competing business. In business sales, it is often a separate agreement between the seller and buyer.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"When is a noncompete considered bona fide and enforceable?",{"text":113,"@type":109},"A bona fide enforceable covenant generally requires the former owner to have the capacity to compete and to fit factors such as service/knowledge basis, special technical knowledge or secret processes, key relationships, or reputation and goodwill.",{"name":115,"@type":106,"acceptedAnswer":116},"How are tax issues and Form 8594 handled for covenants not to compete?",{"text":117,"@type":109},"Covenants not to compete can be treated as Section 197 intangible property amortized over 15 years, and transactions must be reported using IRS Form 8594. Both buyer and seller file the form, and failure to file can trigger penalties.","https://schema.org",{"og:url":78,"og:type":120,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":122,"canonical":78},"index,follow",{"doc_id":124,"site_id":56},282136,1791726702,{"code":4,"msg":5,"data":127},{"doc_id":124,"user_id":128,"nickname":88,"user_avatar":129,"doc_module":9,"category_id":8,"category_name":11,"doc_title":59,"doc_description":61,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":8,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":15,"language":135,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":136,"faqs":137,"seo_title":138,"seo_description":61,"update_tm":139,"read_time":79},2336464648322,"https://ap-avatar.wpscdn.com/avatar/2200025388227c56fec?_k=1778556882303663488","NONCOMPETE AGREEMENTS IN  \nBUSINESS TRANSACTIONS  \nRita M. Lauer, Esq.  \nMaddin, Hauser, Roth & Heller, P.C.  \n28400 Northwestern Hwy. Southfield, MI 48034 p (248) 354-4030 f (248) 354-1422 [maddinhauser.com](maddinhauser.com)  \nWHAT IS A NONCOMPETE AGREEMENT?  \nIN GENERAL:  \n• Contract between employee and employer that prohibits the employee from accepting future employment or operating a businesses that is in competition with the employer.  \n• This traditional form noncompete clause is being challenged by the NLRB and the Federal Trade Commission as being violative of Labor Rights and interferes with the labor market; position is that they should be unenforceable.  \n• Some states are deeming them unenforceable/invalid under state law.  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS | 2 |  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS  \n• When used in the sale of a business, noncompete is usually a separate agreement between the selling member/shareholder and the buyer.  \n• Agreement is not to compete with the new owner; usually a simple paragraph, but usually included as part of  \nseparation/severance/consulting agreement.  \n• Non-solicitation of employees and non disclosure of proprietary information.  \n• In this situation, these agreements are not being contested by NLRB, FTC nor are barred by various state laws.  \n• However, the noncompete still needs to meet some general tests.  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS | 3 |  \nSAMPLE NONCOMPETITION CLAUSE  \nNon-Competition. Employee agrees that during his or her employment with the Employer and for a period of [INSERT AMOUNT](\\#)] years following termination of this Agreement regardless of the time, manner, reason or lack of same (“Restrictive Period”) Employee will not, either directly or indirectly, for Employee’s own account or as an agent, independent contractor, stockholder, employer, employee or otherwise in connection with any other person or entity, engage in the following in [INSERT GEOGRAPHIC SCOPE] become employed for, participate in the ownership, management, operation or control of, or have any financial interest in, any business engaged in the same or similar activities to those carried out by the Employer prior to Employee's separation from employment. This paragraph shall not restrict Employee from being a passive owner of not more than one percent of the outstanding stock of any corporation whose stock is publicly traded.  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS | 4 |  \nWHAT FACTS CONSTITUTE A BONA FIDE & ENFORCEABLE COVENANT?  \nBona Fide – Former owner must have the capacity to compete with business being transferred. Must have one of the following:  \n• The acquired business is service or knowledge based [vs. capital](vs. capital) intensive,  \n• Former owner possesses a special technical knowledge or secret process,  \n• Former owner has long-standing relationships with suppliers or producers,  \n• Former owner has outstanding reputation, good will, outstanding marketing skill, relations = loyal customer base.  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS | 5 |  \nENFORCEABLE NONCOMPETE  \nEven if Bona Fide Agreement, still must be legally enforceable.  \nFactors the Court reviews:  \n• Length of agreement, usually 3 years or less. This is also dependent upon the industry the company operates in. A dog grooming business will have a shorter period than a manufacturing business.  \n• Scope of agreement should not be overly broad.  \nThe scope of the agreement should not prohibit any employment in any unrelated industry.  \n• Geographic scope of the Covenant should be reasonable. Ergo, if dog grooming business is located in Grand Rapids, the geographic scope is excessive if it prohibits seller from working in Saginaw, Bay City, Flint, etc.  \nNONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS | 6 |  \nDOUBLE TAXATION OF ASSETS  \n• Potential for double taxation on sale of corporate-owned business assets.  \n▪ Determine who owns the intangible assets, ","cbCaitxYvZIrdffS","https://ap.wps.com/l/cbCaitxYvZIrdffS","pdf",1471967,"English","# Noncompete agreements in business transactions\n## What is a noncompete agreement?\n## Sample non-competition clause\n## What facts constitute a bona fide & enforceable covenant?\n## Enforceable noncompete\n## Double taxation of assets\n## Tax consequences\n## What is Form 8594?\n## Tax consequences: purpose of the 8594\n## Tax treatment for payment under noncompete","[{\"question\":\"What is a noncompete agreement in a business context?\",\"answer\":\"A noncompete agreement is a contract that restricts an individual from accepting future employment or operating a competing business. In business sales, it is often a separate agreement between the seller and buyer.\"},{\"question\":\"When is a noncompete considered bona fide and enforceable?\",\"answer\":\"A bona fide enforceable covenant generally requires the former owner to have the capacity to compete and to fit factors such as service/knowledge basis, special technical knowledge or secret processes, key relationships, or reputation and goodwill.\"},{\"question\":\"How are tax issues and Form 8594 handled for covenants not to compete?\",\"answer\":\"Covenants not to compete can be treated as Section 197 intangible property amortized over 15 years, and transactions must be reported using IRS Form 8594. Both buyer and seller file the form, and failure to file can trigger penalties.\"}]","NONCOMPETE AGREEMENTS IN BUSINESS TRANSACTIONS - Presentation | PDF",1789570397]