I sold my business two years ago with no non compete - I want to start up again

[Nancy Mahoney]

What is the name of your state (only U.S. law)? New Hampshire

I had a house cleaning business which I sold two years ago as I had an injury and was unable to work. There was not a non compete in the purchase and sale. I did have an attorney draw up papers, and the buyer chose not to be represented by an attorney and thus there was never a non compete in the P&S. I am fully recovered and would like to start another house cleaning business. I am pretty sure since there is no non compete, I can do this. I have bent over backwards giving info to the new buyer to help her, but I am done with that after two years as I'm not a consultant. However, can I solicit my prior customers back after I sold her the business for $70,000 with no non compete in the purchase and sale? Some have been calling me to come back to them if I am able to work again. Here in New Hampshire Thank you.

 

[LdiJ]

What is the name of your state (only U.S. law)? New Hampshire

I had a house cleaning business which I sold two years ago as I had an injury and was unable to work. There was not a non compete in the purchase and sale. I did have an attorney draw up papers, and the buyer chose not to be represented by an attorney and thus there was never a non compete in the P&S. I am fully recovered and would like to start another house cleaning business. I am pretty sure since there is no non compete, I can do this. I have bent over backwards giving info to the new buyer to help her, but I am done with that after two years as I'm not a consultant. However, can I solicit my prior customers back after I sold her the business for $70,000 with no non compete in the purchase and sale? Some have been calling me to come back to them if I am able to work again. Here in New Hampshire Thank you.

Even without a non-compete you would be risking a lawsuit if you were to solicit your former customers. 70k is not pocket change. I would certainly sue you if you did that.

 

[Nancy Mahoney]

New customers for new cleaning business?

Even without a non-compete you would be risking a lawsuit if you were to solicit your former customers. 70k is not pocket change. I would certainly sue you if you did that.

Thanks for your input. However, the buyer wasn't represented by an attorney and she signed her life away with the P&S my attorney wrote; she signed knowingly she wasn't getting any representation and there was no non compete. What is your opinion if NEW customers came to me, and any prior customers called me without me soliciting them. I know I am free and clear to open a new business but it is the prior customers that concern me. IF they come to me, the buyer wouldn't even know..

 

[xylene]

You had a client base that worth 70k to buy and you had a lawyer.

So you know what you are doing. Remember that and do talk to the lawyer.

Honestly, since this is your trade, it might have been better if you had a non-compete or a non solicitiation clause for 2 or 3 years, then you'd know instead of guessing "Will they sue me?"

 

[Nancy Mahoney]

Can buyer sue me with a no non compete?

You had a client base that worth 70k to buy and you had a lawyer.

So you know what you are doing. Remember that and do talk to the lawyer.

Honestly, since this is your trade, it might have been better if you had a non-compete or a non solicitiation clause for 2 or 3 years, then you'd know instead of guessing "Will they sue me?"

I am simply hopping to get a lawyer opinion on this forum, and I did speak with my business attorney prior to the passing. I will do so again in the spring when I'm ready to advertise with a new business name. He did tell me she was stupid for not having a non compete and I can open a new business at anytime. He did say I couldn't solicit my clients, but if they come to me that would be fine. I am just simply reaching out to others who may have been or heard of the same situation. I also did reiterate to my buyer several times that I would be opening another business when I'm able to, but she just assumed I would never do so....she seemed fine with it and I told her I would even give her some jobs if I felt I couldn't do them or if I took a vacation.

 

[LdiJ]

Thanks for your input. However, the buyer wasn't represented by an attorney and she signed her life away with the P&S my attorney wrote; she signed knowingly she wasn't getting any representation and there was no non compete. What is your opinion if NEW customers came to me, and any prior customers called me without me soliciting them. I know I am free and clear to open a new business but it is the prior customers that concern me. IF they come to me, the buyer wouldn't even know..

You do not seem to understand the difference between "non-compete" and not stealing back the business you sold for 70k.

You can compete, without much worry as long as you get new customers. Its taking on any of the old ones that is problematic. You might get away with taking on one or two of them without creating a big mess, but if you solicit them in any way, I would definitely sue you in that scenario.

 

[adjusterjack]

I am just simply reaching out to others who may have been or heard of the same situation.

You also have to understand the difference between suing and winning.

Nothing prevents the lawsuit from being delivered to you. Even if you end up winning it'll cost you plenty to defend. You'll be spending your money and hassling with the lawsuit while you are trying to build a new business. Doesn't work well and can possibly drive you out of business into bankruptcy.

I suggest you stay away from former clients and concentrate on new ones.

If you do get contacted by former clients, ask your buyer for written permission to handle them, or just say no.

PS: If I paid you $70,000 for your customer list I'd sue you the minute to took the first one.

 

[justalayman]

Maybe a different tack will hit home.

No non-compete means you are free to start a new cleaning business.

The problem is that when you sold your original business you, presumably, sold any existing contracts and your client list in the process. That means you don't get to go and solicit your former clients (you know, the people that was one reason you were paid $70k for your business). You don't get to sell your business if the sale includes the customer list and then turn around and "steal" them back. The list is a business asset so you using that list to establish a new business would be no different than you stealing equipment you sold and using it for your business.

Yes, if the old clients come to you you are generally safe BUT it can get very messy proving you didn't solicit them. Even if you didn't the buyer can still sue you if they believe you did.

It's a much safer option to establish a new client list leaving the old clients alone.

 

[quincy]

What is the name of your state (only U.S. law)? New Hampshire

I had a house cleaning business which I sold two years ago ...

Two years would generally be the outside limit on most non-compete agreements (with some notable exceptions).

It appears you would be able to compete with the business you sold, marketing your new cleaning business to former customers as well as to new customers. You should compete, however, by attracting both old and new customers to your business based on the merits of your new business.

The sale of a business is almost always conditioned on the seller not utilizing information gained in their former business to compete directly against the purchaser of the business (in the same geographic area for a period of time), whether these terms of the sale are in writing or merely presumed as part of the business value at the time of the sale. A customer list is considered one of the assets sold with a business that contributes to the value of the business.

 

[Nancy Mahoney]

No Non compete in my purchase & sale when I sold my business

Maybe a different tack will hit home.

No non-compete means you are free to start a new cleaning business.

The problem is that when you sold your original business you, presumably, sold any existing contracts and your client list in the process. That means you don't get to go and solicit your former clients (you know, the people that was one reason you were paid $70k for your business). You don't get to sell your business if the sale includes the customer list and then turn around and "steal" them back. The list is a business asset so you using that list to establish a new business would be no different than you stealing equipment you sold and using it for your business.

Yes, if the old clients come to you you are generally safe BUT it can get very messy proving you didn't solicit them. Even if you didn't the buyer can still sue you if they believe you did.

It's a much safer option to establish a new client list leaving the old clients alone.

Thank you for your valued opinion, which is what my lawyer had told me prior to me passing papers. If the buyer was not smart enough to have an attorney, and not smart enough to put a non compete in the purchase & sale, then I am free to open a new business. There are only a couple of clients who are emailing me and asking me to come out of retirement as they are not happy with the new owner.....I will double check in the spring, but I know not to send a mailing out to my previous clients; some of them are my friends now as I cleaned for them for over a decade. I also know not to solicit but if my prior clients see an ad and call me to help them, then I am able to do so if I choose to, but they would have to terminate their current business relationship. Thank you again for being on the same page as me.

 

[Nancy Mahoney]

No Non Compete

Two years would generally be the outside limit on most non-compete agreements (with some notable exceptions).

It appears you would be able to compete with the business you sold, marketing your new cleaning business to former customers as well as to new customers. You should compete, however, by attracting both old and new customers to your business based on the merits of your new business.

The sale of a business is almost always conditioned on the seller not utilizing information gained in their former business to compete directly against the purchaser of the business (in the same geographic area for a period of time), whether these terms of the sale are in writing or merely presumed as part of the business value at the time of the sale. A customer list is considered one of the assets sold with a business that contributes to the value of the business.

Thank you for your prompt response. I do not intend to market previous clients. If a previous client emails or calls me should they see my advertising, they would have to terminate their business relationship. There are only two or three people that I would take back on as they are my friends; after being in the business over a decade, I made a lot of friends from the business I sold, but by no means will I take all my business back. I will make a fresh start. Stupidity for not having an attorney read the seller's P&S and for not putting a non compete in the P&S. I know the customer list is the asset I sold, but if the customer isn't happy with the new owner, it's not my fault.