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FTC Non-Compete Ban – Sale of Business Exception
Home › Articles › FTC Non-Compete Ban – Sale of Business Exception
Home › Articles › FTC Non-Compete Ban – Sale of Business Exception


FTC NON-COMPETE BAN – SALE OF BUSINESS EXCEPTION

Timothy D. Norton, Esq. and Antony B. Kamel, Esq. Posted on May 22, 2024

Frier Levitt previously highlighted the Federal Trade Commission’s (the “FTC”)
final rule banning non-compete clauses between employers and employees (the
“Final Rule”). 

While the Final Rule is slated to take effect 120 days after its publication in
the Federal Register, the implementation of the Final Rule remains in doubt due
to a series of legal challenges.  However, to the extent the Final Rule does
ultimately take effect, the sweeping federal ban would not apply to non-competes
in the context of the sale of a business.  Specifically, the “sale of business”
exception adopted by the FTC in the Final Rule would allow non-compete clauses
that are entered into by a person pursuant to a bona fide sale of (1) a business
entity, (2) the person’s ownership interest in a business entity, or (3) all or
substantially all of a business entity’s operating assets.  

M&A activity in the healthcare space remains high, and this important exception
recognizes that buyers continue to have a legitimate business interest in
protecting the value of the acquired business, including goodwill.  Suffice it
to say that, absent such restrictions, the going concern value of the acquired
business would be substantially diminished if a seller were to compete with the
buyer following the sale. Therefore, to the extent permissible under relevant
state law, buyers would be well advised to utilize non-compete agreements in
connection with acquisitions, redemptions of departing owners and other bona
fide sale transactions. 

If you have any questions on how to best protect the going concern value of your
acquisitions, please contact Frier Levitt today.


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     * Palliative Care, Hospice Care and Home Care
     * Physician Dispensing
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     * Regenerative Medicine, Anti-Aging and Wellness
     * Telemedicine & Telehealth
     * Value Based Care
     * Government Investigations, Litigation & White-Collar Defense
   * Life Sciences & Pharmacy
     * 340B Covered Entity and Contract Pharmacy Regulatory and Contract Support
     * Advocacy and Government Affairs
     * Antitrust Tools Available to Combat PBM Abuse of Pharmacies
     * Board of Pharmacy Investigations
     * Change of Ownership (CHOW)
     * Clinical Trials / Human Subjects Research
     * Defending Pharmacies in PBM Audits
     * DIR Fees
     * Drug and Device Advertising, Marketing & Promotion Legal Review
     * Employment Matters
     * Federal & State Fraud and Abuse Counseling
     * Intellectual Property Services
     * MAC Pricing & Appeals
     * Medicare Advantage Risk Adjustment Litigation
     * Medicare Audit Appeals
     * Mergers & Acquisitions
     * Payor Network Access and Defense of Network Terminations
     * PBM Qui Tam Lawsuits
     * Pharmacy Transactions
     * Physician Dispensing
     * Plan Sponsor PBM Contract Services
     * Private Equity Investing in Specialty Pharmacy & Pharmaceutical Companies
     * Regenerative Medicine, Anti-Aging and Wellness
     * Review of Promotional and Advertising Materials
     * Risk Assessment Mitigation Strategy
     * Telehealth & Telemedicine
     * Value Based Care
     * Government Investigations, Litigation & White-Collar Defense
 * Who we serve
   * Healthcare
     * Ambulatory Care Facilities/Ambulatory Surgery Centers (ASCs)
     * Behavioral Health Practitioners
     * Clinically Integrated Networks (“CINs”)
     * Dental Practices
     * Dispensing Physician Practices and Dispensing Physicians
     * Hospitals and Healthcare Systems
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     * Management Services Organizations (MSOs)
     * Medical Spas
     * Palliative Care, Hospice Care and Home Care
     * Physicians and Medical Practices of all Specialties
     * Skilled Nursing Facilities and Long-Term Care
     * Start-Up Healthcare and Life Sciences Companies
     * Value Based Care Organizations: ACOs, IPAs and CINs
   * Life Sciences & Pharmacy
     * 340B Covered Entity and Contract Pharmacy Regulatory and Contract Support
     * Biotechnology Companies
     * Chain Pharmacies
     * Clinically Integrated Networks (“CINs”)
     * Community, Retail Pharmacies
     * Compounding Pharmacies (503A)
     * Dispensing Physician Practices and Dispensing Physicians
     * Fertility Pharmacies
     * Home Infusion Providers
     * Hospitals and Health Systems
     * Integrated Delivery Network
     * Long-Term Care Pharmacies
     * Outsourcing Facilities (503B)
     * Pharmaceutical Manufacturers
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www.frierlevitt.com Open in urlscan Pro
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