The buyer involved in an asset sale may want to impose restrictions on the seller after the sale is completed. Common restrictions include the seller agreeing not to be involved in any competing business and not to solicit (eg hire or sell to) the seller’s customers, suppliers or employees for a specified period of time.
It is important to ensure that any restrictions imposed are reasonable and not unjustifiable restraints of trade. Otherwise, restrictions risk being unenforceable. To ensure terms are reasonable, it is helpful to limit restrictions in terms of scope (geographically and functionally) and time. The usual duration of restrictions is 1 to 5 years.
For more information, read Non-solicitation and restrictive covenants.