December 2, 2016
Antitrust: Non-Solicits & Comp Diligence Under New Guidelines
As this Sheppard Mullin blog notes, the FTC & DOJ recently issued guidance warning companies about entering into agreements not to solicit employees and about sharing employment-related data with competitors. This Cooley M&A blog discusses the implications of this guidance on employee non-solicitation language customarily included in confidentiality agreements, and provides tips for handling employment & compensation matters in due diligence. Here’s an excerpt suggesting some precautions for the due diligence process:
The guidelines acknowledge that a buyer in an M&A deal may need to obtain access to limited competitively sensitive information during the course of the negotiations but state that “appropriate precautions” should be taken. The guidelines do not, however, specify what those precautions should be. For practical purposes, it is appropriate to treat compensation information of highly-trained or specialized employees in a competitively-sensitive deal in the same way one would treat a trade secret or pricing.
Data room access can be restricted to only those who really need to view the information, & using a “clean team” to view the data – as is often done for intellectual property or any other sensitive information – can help protect against claims that information was inappropriately shared between competitors.
– John Jenkins