First let’s talk about what a Noncompete is. It’s a legal document you sign when selling your company that keeps you off the playing field for a certain amount of time after the sale. If you think about it from a buyer’s perspective it makes sense. The selling founder not only holds the secret sauce but she has the ability to “do it again” even better due to her gained experiential wisdom and the buyer wants to protect their investment. Pretty black-white.
For the purposes of this article, I’m not addressing the legalities of noncompetes. Their enforceability is always grey matter and plenty of people try some amazingly crafty maneuvers to get out of them. But in my opinion, if you signed one…you signed one. I believe in taking 100% responsibility for your actions even if things don’t go as planned.
If you google noncompetes you will find more info than you’d ever want to know around the legal nuances involved in these docs. Almost all of the articles are written by lawyers, men and by people who haven’t lived through a noncompete. Yes, I am a lawyer although I haven’t practiced since 2001 so I’m a defunct lawyer. But on this January 1st, 2020, as I crawl out from under 7 years of noncompetes, here are a few tips from a female entrepreneur who has lived it.
1. Assume post-transaction won’t go as planned. When I signed my deal in October 2012 it was my first transaction and although I am smart, I was naive and overly optimistic. At 100 franchised locations and 2 employees, I was no longer doing much of what I loved and with a very full pipeline, I knew we needed infrastructure, yet I didn’t want to be the one to build it out. At that time, I actually wanted to resign as CEO and move to Chief of Innovation. I met with many potential buyers and ultimately chose to sell a majority interest in Pure Barre to a Private Equity group because the partner said everything I wanted to hear. In fact, I still have the journal where I noted from our meeting where she said: “We value Brand, Quality, Innovation and Culture. We will pursue slow smart, growth and hold you for 7-10 years”. Clearly she had my number! After the transaction I did move to COI but ended up leaving as management proceeded to open 200 more franchises in under 3 years and then sold (aka flipped) the company in 2015. You don’t need to be an entrepreneur or in franchising to understand the math. Massive growth + Short Time Frame does not = Brand, Quality, Innovation + Culture. This is my story and not all deals go this way but I will say that most of my founder friends who have sold their companies’ have a similar story. So yes, stay OPTIMISTIC (because who wants to live life like Eeyore) but be REALISTIC.
2. Assume you will want to get back in to the Industry even if you don’t think so at the time you sign the noncompete. It’s not always the case but often a founder is nearing burnout when they consider selling. Although overnight success sounds dreamy, it just doesn’t happen. The road to success is a long and brutal journey which absolutely brings joy and fulfillment but is also plagued with failures, fear and sacrifice. It’s completely understandable to think…if this doesn’t work out I need a break from the industry anyway and I’m ready to get off this emotional rollercoaster. The thing is, if you’ve built a company, you are no-doubt also resilient and eventually you come back to life. When that happens, you realize a main ingredient of your past success was because of the passion you possess as well as the gift you were given, neither which have vanished.
3. Consider the emotional impact of another person/entity having their thumb over you and your career. This can be especially challenging if that person/entity’s WHY is polarizing from your WHY (for example a financial why vs. women’s health why). Even if you are ready to take a break or try a different Industry, every Entrepreneur places a high value on Freedom and just knowing someone is watching you, and can tell you what you can and can’t do with your career is something to think through. If you are an Enneagram 7 whose essence is Freedom, like myself…double whammy. Although by no means the same as life freedom, much insight can be gained by Mel Gibson’s Freedom Speech in Braveheart- “They may take our lives but they'll never take our freedom!"
4. If you find yourself out of your company and under a noncompete, use the time as an opportunity to Explore. It’s a “gravity problem” and by that I mean, there is nothing you can do to change it, so just accept it and make the best of your time. Explore the outer edges of your industry and find ways to play in the game without violating your agreement. Explore another industry. Go back to school. Serve on Boards and share your knowledge. Dive in to Philanthropy. Do some soul-searching and focus on spiritual growth. Have 3 kids in one year, or not.
5. Last, but most important, find the lessons, the positives and develop true gratitude for the experience. I don’t believe in regret. There is absolutely nothing positive or productive that comes from it. I do believe in learning from past decisions and outcomes and using that experiential data to make wiser and more enlightened decisions as you move forward through life. For me, this process has allowed for so many learnings. I could not share them all here but I will share my top 3.
Lesson Learned. I have learned that people are in business for different reasons and that is OK. The job of a Private Equity firm is to make their investors a return. They are wired differently from entrepreneurs but that doesn’t make them bad people, it makes them different.
The Positive. I have a hard time carrying babies to full-term. Turns out my uterus aligns with my forward-thinking mindset and is always ready to just move on. All joking aside, my twins were born at 31 weeks. I am 100% certain that if I was still running the company through that pregnancy and enduring the stress that inherently came with it, I would not have my girls today.
True Gratitude. This one took me a while to develop but yesterday, on the eve of my freedom, it came. Prior to this phase, I had an Amazing career, but no life. Heard of Sublimation in Behavioral Psychology? Working nonstop is how I channel and how I have channeled since early childhood. I believe I needed this full amount of time to do a different type of work which has brought so much depth, breadth and enlightenment. And for that, I am truly, truly grateful.
And because I’m a choreographer at my core, the whole Process can best be played out musically as follows:
Deal Closing- Walking On Sunshine x Katrina & The Waves
Moving to CIO- Born to Be Alive x Patrick Hernandez
Soon thereafter- Issues x Julia Michaels
And after that- Should I Stay or Should I Go x The Clash
Upon departing- Somebody’s Watching Me x Rockwell
A rotation of the following over the next few years- I Will Survive x Gloria Gaynor, Eye of the Tiger x Survivor and Stayin’ Alive x Bee Gees
Nearing the end- Champion x Bishop Briggs
Noncompete expiration- Freedom! x George Michael
Now- Into the Unknown x Panic! At the Disco