Noncompete and Nonsolicitation Clauses in Insurer and Insurance Brokerage M&A

In insurer and insurance brokerage M&A, the value of a business often lies in its people, client relationships and origination capabilities, making noncompete, nonsolicitation, nondealing and nonpoaching restrictions a critical part of deal protection. On this episode of “The Practice Manual,” host Rob Chaplin is joined by colleagues Caroline Jaffer, Helena Derbyshire and Damian Babic to examine how these restrictive covenants operate in practice, the differences between vendor and employment covenants and the U.K. enforceability principles that require restrictions to be carefully tailored to a legitimate business interest. The panel also explores practical risks that can arise in transactions, including TUPE-related issues in asset deals, team moves and post-acquisition hiring, as well as potential U.K. reforms to employment noncompetes. **Key Points** - Restrictive covenants are contractual provisions that restrict what a seller can do after a sale. To protect the goodwill in a business being sold and stop the seller from competing with the target for a defined period, companies utilize noncompetes, nonsolicitation, nondealing and nonpoaching clauses. - In the employment context, stricter rules apply, including with regard to what legitimate business interests justify the clauses. The panel also examine why a one-size-fits-all approach is a recipe for unenforceability, as well as some of the less obvious risks in insurance M&A, including Transfer of Undertakings (Protection of Employment) (TUPE) transfers, and the litigation risk arising from team moves and hiring individuals subject to known restrictions. - The U.K. government has issued a consultation paper on reforming noncompete clauses, including proposals for a statutory three-month cap, a complete ban and salary threshold restrictions. The panel assesses what the changes would mean in practice for insurance M&A and the creative retention strategies — such as deferred consideration, earn-outs and enhanced garden leave — that may become increasingly important to consider. ## **Connect and Learn More** ☑️ Robert Chaplin | LinkedIn ☑️ Helena Derbyshire | LinkedIn ☑️ Caroline Jaffer | LinkedIn ☑️ Damian Babic | LinkedIn ☑️ Skadden | LinkedIn | X | Facebook ☑️ Subscribe Apple Podcasts | Spotify | Amazon Music *“The Practice Manual" is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.*