Hello everyone,

I have a question regarding selling a web hosting business. Is a non-compete contract really required when selling a hosting business?

Thank you.

It is only required if you state it when selling your hosting company. So unless you offer it, or they request it, no. Dont quote me, but Im pretty sure thats how it works.

required ? depends on the buyer.

we require non-compete agreements where we take over a compnay as an ongoing concern, rather than just a few clients to incorporate into an existing brand.

look at it this way - is someone going to pay you top-dollar to take on your existing client-base which you no longer want, only to have you start again but better capitalised and more experienced ?

Originally posted by othellotech
required ? depends on the buyer.

we require non-compete agreements where we take over a compnay as an ongoing concern, rather than just a few clients to incorporate into an existing brand.

look at it this way - is someone going to pay you top-dollar to take on your existing client-base which you no longer want, only to have you start again but better capitalised and more experienced ?

I completely agree with this from both prospectives if you are buying clients / company you shoul expect the seller to sign a Non-Compete Agreement. And if you are selling the company and or assets you should expect to sign one as its just protecting the recieving companies / party's interests.

Thanks
- James

Thanks a lot guys, greatly appreciated.

Check with State laws. In some states, the non-compete agreement is not even worth the paper it is written on

yes but in legalaites ofter THREATS are worth more than anything ;)

Most buyers will require a non-compete ---- there are also possible tax consequences on both sides of the table.... the buyer may be able to expense the non-compete over the term of the agreement ---- providing tax advantages (talk with your attorney and accountant) --- Tom

Thanks guys. What if I already engaged in starting a new hosting business even before the bid was done?

Then a buyer who wants an ND wont want to buy your old business as you wont be able to fulfill their terms of purchase.

Discuss it with them, and if it cant be resolved, move on to the next bidder

Originally posted by StephenNguyen
Thanks guys. What if I already engaged in starting a new hosting business even before the bid was done?

if I was a Buyer I would assume you were trying to rip me off....


In one of 3 ways


1> Sell me the Company and then attract your old clients (the ones I Paid for) back to your new company

2> There is something wrong with your current client base and you want to unload them

3> you screwed up in some way and are not disclosing it..

4) It is partnership issue. It is impossible to work together and the company is in very good reputation of course.