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Friday, March 28, 2008

Non-Competes and Database Transfers

posted by 
Martin Snyder (24)

Intersting take on non-compete agreements today on thestreet.com

The gist is than rather than attemp to complete/enforce an uphill battle, you might be better as a firm owner to sell departing recruiters their books of business for (a suggested valuation) 3X sales. 

I think this indeed may be a more common practice in the TPR industry, as we now deal with database transfers to ex-employees at least a few times per month. 

Some tips if you are including database elements in an agreement:

-Make it clear if the transfer will be a move or a copy (e.g. will you retain the data and then both use it going forward, or will you no longer have access to it?)  

-Make it clear when title to the data is passed (upon final payment, upon execution, or something in the middle). 

-Make it clear what kind of data is to be subject and which is not (e.g. company database files , Outlook contacts, Word docs, email archives, etc.)

- You may want to inform your database vendor or IT people that a given data asset may be subject to future transfer- could lower costs to seperate it going forward and avoid mistakes later    

From my seat, it might also be smart to include provisions in any future account sales agreement about solicitation of your other employees- losing one person is one thing; mass exodus is a whole other thing.   

It also might be smart to define what it takes to 'secure' a client (i.e. how much of the work was the salesperson's and how much was the firm's, with a valuation model fitted to each situation)

This is a tough but real aspect of bringing people along in any services business......

 

 

 

  

 

 



posted 3/28/2008 at 8:36 a.m. PT permalink | comments (0) | trackbacks (0) | email this posting
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