Negotiating a Non-Compete Agreement After 7 Years with the Company

[nickdrake]

I am an employee at a small software company that is in negotiations for being sold to another company. I am the sole remaining software developer and was the key architect and programmer that built the system that accounts for nearly 100% of our revenue. It would be impractical and extremely difficult for the current owners or the potential new owners to proceed without me. I own only a small percentage of the shares. I am not under any employment agreement.

Our market is very small. There are only 100 companies that would buy a product like ours. We have 3 competitors – all small companies. Our company is being sold because we’re doing poorly and it will require a lot more cash investment to have a real chance at future success.

The CEO recently handed me an Employment Contract to sign, and I have not responded at all. It includes non-compete terms, non-solicitation, lots of stuff. I assume this contract would help our current owners in their effort to sell the company, and I’m guessing maybe it’s a requirement of the buyer.

I am interested in future entrepreneurial opportunities and do not like to restrict my options.

The contract, as currently written, guarantees me a 3-month severance in the event that I’m laid off, but I don’t see any scenario where the buyer would let me go. Quite the opposite. I would expect to be offered a retention bonus by the buyer. So this contract only helps the company and hurts me. (I’m a bit annoyed that my boss said he’s giving me this to “protect me”. BS.)

My question is how I should negotiate this. My initial reaction is to agree to sign the contract in exchange for 2 years salary payable immediately. Is this too aggressive or unrealistic?

Any thoughts or advice would be much appreciated.

[cbg]

Totally unrealistic, in my view.

Keep in mind that the employer is free to pull any agreement at all and let you go altogether if you push too hard.

Show the agreement to an attorney in your state, but your employer has no incentive to negotiate at all.

[nickdrake]

Hmmm...I'm not wanting any agreement. If my employer let me go they would have a huge expense to hire multiple new people to replace me, and it would be extremely difficult and time consuming for new people to get up to speed enough to support the existing customers and system. I think my employer has a great incentive to negotiate with me because they probably need this contract in place to sell the company. And they can't sell a software company without someone to run the system. They can say "oh, the guy who built all this is gone, but we just hired Fred and he's real good".

--I currently have no employment agreement at all with them. This would be brand new.

[cbg]

Okay then.