Non-Compete and Non-Disclosure Covenants:
Commonly Used “Boilerplate” Can Impede Enforcement

Abstract

Non-compete and non-disclosure covenants make an appearance in almost every transaction. The language used in these covenants has become familiar, and many view it as “boilerplate.” Indeed, most players in the private equity industry use standard forms or templates when a non-compete or non-disclosure covenant is needed. But much of the boilerplate language commonly used in non-compete and non-disclosure covenants is outdated, overly broad, and likely to impede enforcement. This article first discusses the basic principles of non-compete law and then identifies and discusses some commonly used—but legally problematic—boilerplate covenant language.

TOPICS: Private equity, legal/regulatory/public policy, portfolio construction