Your non-solicit can bar customers who come to you.

A non-acceptance clause — sometimes called a no-serve clause — bars you from doing business with a former customer even when that customer finds you and you never reached out. It is a different promise from a non-solicit. Given with the sale of goodwill, it is judged far more permissively than in employment. Negotiate it separately.

What are the three covenants I actually sign when I sell my business?

Three separate promises usually travel together in the purchase agreement: a customer non-solicit, an employee non-solicit or no-hire, and a non-acceptance clause. Each bars different conduct, each runs for its own term, and each is tested on its own facts. They are three instruments, not three sentences of one.

A no-hire is not a non-solicit: it reaches the person who quit on their own and applied to you cold. Every line also assumes the clause is enforceable where the fight is heard.

Why is a non-solicit enforced against a seller when the same words fail against an employee?

A covenant given in connection with the sale of goodwill is judged far more permissively than identical words in an employment contract. The buyer paid money for the probability that customers come back. California shows the split most cleanly by statute: employment non-competes are void, yet a covenant from an owner who sells the goodwill is permitted within limits.

Section 16600 of the California Business and Professions Code voids a contract to the extent it restrains anyone from engaging in a lawful profession, trade, or business. Senate Bill 699 added section 16600.5, effective January 1, 2024, making a contract void under that chapter unenforceable regardless of where and when it was signed and giving a current, former, or prospective employee a right to sue. Section 16601 is the carve-out, and it is narrow. An owner who sells the goodwill, or disposes of all ownership interest, may agree not to carry on a similar business in a specified area where the sold business operated, so long as the buyer keeps carrying on a like business there. The permission attaches to the goodwill, not to you personally and not to your employment agreement with the buyer.

Law: California Business and Professions Code sections 16600, 16600.5, and 16601.

In Fillpoint, LLC v. Maas, a shareholder sold his stock and signed two covenants: three years in the stock purchase agreement, one year in an employment agreement running from the end of his employment. The buyer sued on the employment covenant. The Court of Appeal affirmed a nonsuit, holding that reading the documents together did not make it a sale-of-goodwill covenant. Therefore, unenforceable.

Case: Fillpoint, LLC v. Maas, 208 Cal. App. 4th 1170 (2012).

Delaware polices overbreadth on the same logic. In Kodiak Building Partners, LLC v. Adams, a buyer of many small companies imposed covenants on a selling minority stockholder protecting the goodwill of the whole group, not the truss business it bought. The Court of Chancery held they reached past any legitimate interest and refused to blue-pencil.

Case: Kodiak Building Partners, LLC v. Adams, C.A. No. 2022-0311-MTZ, 2022 WL 5240507 (Del. Ch. Oct. 6, 2022).

I read the restrictive covenant article and the definitions section before I read the price, because the definitions decide what the covenant actually reaches.

The goodwill you sold is the outer edge of what the buyer can lock up. Anything drafted past that edge is the buyer asking you to donate.

Did the FTC non-compete ban change anything for my sale?

No federal rule bans non-competes. As of September 2026, the Federal Trade Commission’s Non-Compete Clause Rule is gone: a court set it aside nationwide in 2024, the Commission acceded to that vacatur in September 2025, and the rule left the Code of Federal Regulations in February 2026. State law controls your covenants.

Case: Ryan LLC v. FTC, No. 3:24-cv-00986-E, 746 F. Supp. 3d 369 (N.D. Tex. Aug. 20, 2024).

Agency action: FTC vote to accede to vacatur, September 5, 2025; removal of 16 C.F.R. part 910, effective February 12, 2026.

Federal law is not irrelevant, though. The Commission now proceeds case by case under Section 5 of the FTC Act, taking orders against employee non-competes and challenging no-hire agreements between companies. Those actions target employment restraints, and the vacated rule itself excepted covenants given in a bona fide sale of a business. Seller-side exposure is lower, not zero.

Agency action: FTC final consent order, Gateway Services, Inc., approved November 26, 2025.

So the governing law clause matters more than any federal development. Which state’s law applies, and which courts hear it, sets the real reach of your covenants.

Can the buyer stop me from serving a customer who calls me first?

Yes, if the purchase agreement contains a non-acceptance clause and the governing state enforces it. Non-acceptance means you may not do business with a covered customer at all, no matter who started the conversation. Inbound calls, referrals, and competitive bids you did not chase are captured. The customer’s choice becomes your breach.

The difference from a non-solicit is evidentiary, and it is brutal. Under a non-solicit, the buyer must establish that you reached out, and emails, call logs, and memories are contested ground. Under a non-acceptance clause, the proof is mostly your invoice. The buyer still shows the customer is covered and the clause valid, but not that you sought the work.

Validity is the real fight, and it is answered state by state. Sale-of-business exceptions are sometimes narrow. California’s permits an agreement not to carry on a similar business in a defined area, which is not a promise never to accept money from a customer list. Other states ask only whether the restraint protects a legitimate interest.

Three drafting details turn it from narrow to lethal.

• The definition of customer. “Customer” often reaches anyone who bought in the last two or three years, plus “prospective customers” the business contacted. You cannot clear a name against a list you never received.
• The word affiliates. If the covered group is customers of the buyer and its affiliates, a buyer that acquires four more companies after closing has enlarged your restriction without asking. That is the reach Delaware rejected in Kodiak.
• The tolling provision. Many covenants pause the restricted period during a breach or litigation over it. A one-year clause can then run far longer, if a court gives that language effect.

Do not plan on unenforceability as your defense. A ruling that the covenant fails comes late, and the buyer can move first for an injunction. Injunctions are discretionary and the buyer carries the burden, but you fund the hearing anyway. If the buyer holds an earn-out or seller note and the agreement allows a setoff, expect one.

A non-solicit asks who reached out first. A non-acceptance clause does not care. The proof of breach is your own invoice.

Is an employee no-hire clause legal when it comes with the sale?

An employee no-hire tied to a genuine sale is generally defensible. A standalone agreement between businesses not to hire each other’s workers is exposed, and a naked one between competitors can be charged criminally. Antitrust law treats the two differently, and the enforcement agencies have published current guidance on where the line sits.

The Department of Justice and the Federal Trade Commission issued the Antitrust Guidelines for Business Activities Affecting Workers on January 16, 2025, replacing the 2016 human resources guidance. They cover no-poach and wage-fixing agreements, non-solicitation clauses, franchise hiring restrictions, and training repayment. Guidelines are enforcement policy, not binding law.

Guidance: DOJ and FTC, Antitrust Guidelines for Business Activities Affecting Workers (January 16, 2025).

The rescue for a seller-side no-hire is the ancillary restraint doctrine. A restraint subordinate to a legitimate transaction, reasonable in scope and duration, and reasonably necessary to make it work is judged under the rule of reason. In Eichorn v. AT&T Corp., the Third Circuit held an eight-month no-hire accompanying the sale of a business unit was not an unreasonable restraint, noting the employees could still work across the industry.

Case: Eichorn v. AT&T Corp., 248 F.3d 131 (3d Cir. 2001).

Note what carried that result. The restraint was short, attached to a real sale, and left the workers a market. A five-year no-hire covering every employee of the buyer and its affiliates has none of those features.

Where do these clauses hide, and how long do they run?

Non-acceptance and no-hire terms commonly appear as subsections inside the restrictive covenants article of the purchase agreement rather than as separate sections. Two consequences follow. They inherit the non-compete’s definitions without being negotiated, and their term is buried in the same subsection, so it can outlast the non-compete with nobody flagging it.

That is not an accident of style. The non-compete is what everyone argues about, so a buyer can concede a year there and take it back in the subsection nobody reads. Pull every date onto one page.

Duration is where round numbers deserve the most skepticism. Florida, which has a detailed statute, presumes a restraint of three years or less reasonable against the seller of a business and more than seven years unreasonable. Against a former employee, it presumes six months or less reasonable and more than two years unreasonable. Same words, different presumption.

Law: Florida Statutes section 542.335(1)(d)(1) and (1)(d)(3).

Those numbers are Florida’s, and a separate 2025 Florida regime for higher-paid employees leaves the seller presumptions alone. Many states use a reasonableness test with no numbers, so check which law your agreement picked.

One more item, a tax question rather than a contract question, stated as of September 2026. If the covenant carries a dollar value in the allocation schedule, ask your accountant how that allocation is reported and taxed before you agree to it.

How should each covenant be negotiated separately?

Each covenant gets its own section, its own defined terms, and its own end date. Negotiating them as one block guarantees the buyer’s draft survives largely intact. Six edits do most of the work, and each is a request you can make in plain language.

• Carve out general advertising. A website, a trade advertisement, a booth at an industry show, and a general mailing are not solicitation. Without that sentence, your ordinary marketing is arguably a breach.
• Carve out inbound contact. Say plainly that you may serve a customer who contacts you without solicitation by you. That kills the non-acceptance problem. If the buyer insists on a no-serve, make it short and paid for.
• Name the accounts and the people. Replace “any customer” and “any employee” with a schedule attached at signing. A named list is knowable and finite; “any” is neither.
• Exclude affiliates and future acquisitions. The covered business is the one you sold, as it existed at closing.
• Match the term to the money. Tie the restricted period to the earn-out or the seller note rather than a round five years. If the buyer’s payment obligation ends in twenty-four months, so should the restriction.
• Make the covenants lapse on default. If the buyer fails to pay the note, earn-out, or deferred price when due, the covenants terminate. Strike any right to offset claimed breaches against what you are owed, or require a court finding first.

Ask for tolling to come out, and for the remedies clause to be mutual. A stipulation that breach causes irreparable harm is a factor a court may weigh, not a finding it must accept.

What should I do before I sign the letter of intent?

The letter of intent is the leverage moment, because signing it grants exclusivity, ends your conversations with other buyers, and leaves the covenant drafting to the buyer’s counsel. Covenant scope belongs in the letter of intent alongside price. Four concrete steps, in this order, before you countersign anything.

• List each covenant on one page: who is bound, what conduct is barred, who is covered, how long it runs, what triggers a breach. Any box you cannot fill in is the negotiation.
• Add three sentences: covenants are limited to the business sold, inbound and unsolicited business is excluded, and the restricted period ends when the buyer’s payments do.
• Write down your next venture in two lines: the industry, the geography, the first three people you would hire. Then test each covenant against it.
• Ask that the schedules of covered accounts and employees be attached at signing, and confirm the governing law and forum.

Most of a letter of intent is non-binding, but exclusivity usually binds, and it spends your leverage. Once the covenants are drafted and the diligence is sunk, the clause you skipped is the clause you live under.