Vertical SaaS Deals: Employment & Non-Compete Agreements Done Right
Negotiating Employment & Non-Compete Agreements on vertical SaaS deals, with the structure protection and capital connectivity an independent sponsor actually needs.
Vertical SaaS deals in the lower middle market run a specific playbook. Employment & Non-Compete Agreements is where the structure either holds or starts to leak.
The typical vertical SaaS platform sits at $10M to $200M EV with EBITDA in the $2M to $30M (or run-rate ARR) range. The thesis runs on platform plus adjacent module acquisitions inside a single end-market. The ARR number on the CIM is rarely the ARR number on the closing balance sheet. Reconcile early.
How Employment & Non-Compete Agreements actually gets structured.
Negotiate seller non-competes to the maximum enforceable scope, by state law.
Refresh key employee restrictive covenants pre-close, where possible.
Address the FTC non-compete rule and its state-by-state aftermath.
Tie executive non-competes to retention bonus economics that survive a quick exit.
In vertical SaaS, layer in ARR bridge built before LOI signing as part of the Employment & Non-Compete Agreements workstream.
Drafting a national-scope non-compete in California. Enforceability is a binary, not a spectrum.
"A non-compete is only as strong as the state it sits in. Draft for the state, not the deal."Jason Powell · Employment & Non-Compete Agreements
The deal is one thing. The capital that opens up after close is another.
The capital that opens up post-close, from refinancing to growth equity to strategic exit, runs through a small set of Wall Street relationships. That network is built in.
Related deal pages.
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Management Fee Structuring for Vertical SaaS
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Transaction Fee Structuring for Vertical SaaS
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Working Capital Adjustments for Vertical SaaS
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Employment & Non-Compete Agreements for Vertical SaaS, on independent sponsor terms.
Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.