Posted by John B. Corey Jr. on August 13, 2005 at 19:34:25:
Take the view that any non-compete will not stand up in a legal test. Hence if you are training people in what you do they will be competators or they will realize why they are better off investing through you (work it too hard, they do not like the type of work, they lack the detail focus that you might have, etc).
An agreement can be useful as a warning but it will never be considered binding for very long if at all. It will be hard for you to argue that you have provided properitary knowledge, that the information is confidential, etc. I have seen such agreements blown out of the water when a good lawyer gets involved.
Yes, the agreements sometimes work in a corporate setting where the time value of the informaiton is high so that a 120 non-compete can really have an impact. This is sometimes referred to as gardening leave. It works if you are willing to pay the person to sit at home and they were an employee so you really owned the information prior.
Chelsea Private Equity LLC