This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Picture an asset deal for a Florida services company where half the purchase price is really a bet on the workforce. Twelve senior technicians, each with a signed noncompete, each holding the customer relationships that make the revenue recur. The buyer’s model assumes those covenants hold. The purchase agreement assigns “all contracts, including all restrictive covenant agreements” to the buyer at closing. Eight months later a technician leaves, takes two accounts across town, and the buyer’s litigation counsel opens the noncompete to draft the injunction motion — and finds two paragraphs of restrictions, a merger clause, and not one word about assignment. In Florida, that silence is not a gap. It is very likely the whole case.
Section 542.335 lets assignees enforce — but only if the contract says so
Florida’s restrictive covenant statute, Fla. Stat. § 542.335, is famously enforcement-friendly. Courts must construe covenants in favor of protecting legitimate business interests, cannot apply drafter-hostile construction rules, and must presume irreparable injury from violation. But subsection (1)(f) contains a condition that cuts against buyers. A court will not refuse enforcement merely because the plaintiff is an assignee or successor of the original contracting party — provided, in the statute’s words, the covenant “expressly authorized enforcement by a party’s assignee or successor.” The corollary has real teeth: if the covenant is silent on assignment, an assignee generally has no enforcement right under the statute. Florida courts have applied that condition literally. Boilerplate helps only if it is the right boilerplate — a general “successors and assigns” clause elsewhere in the agreement has drawn skepticism from courts asking whether anything “expressly authorized” enforcement of the restrictive covenant by an assignee.
The same subsection handles third-party beneficiaries with matching strictness. Under (1)(f)(1), a third party can enforce someone else’s noncompete only if the covenant expressly identified that person as an intended third-party beneficiary and expressly stated the restraint was intended for its benefit. So the two doors into another company’s noncompete — assignment and third-party beneficiary status — both require express drafting done before the dispute, usually years before, by lawyers who had no idea an acquisition was coming.
Deal structure decides whether the problem exists at all
This is fundamentally an asset-deal problem. In a stock sale or a straightforward equity purchase, the employer never changes — the same entity that signed the noncompete still employs the technician the day after closing, so there is nothing to assign and (1)(f) never wakes up. That asymmetry deserves a line item in the asset-versus-stock decision, because buyers usually reach for asset treatment for tax basis and liability-screening reasons without noticing that one of the assets they most care about may not survive the trip. Mergers sit in between: enforcement rights can pass to the surviving entity by operation of law rather than by assignment, and Florida courts have treated statutory mergers more forgivingly than asset assignments. But a buyer betting seven figures of enterprise value on the distinction between succession-by-merger and assignment-by-contract is a buyer who should have just fixed the paper.
Diligence means reading every covenant, not counting them
The diligence request list always asks for restrictive covenant agreements, and the data room always produces a folder of them. The mistake is treating that folder as a checklist item — twelve employees, twelve noncompetes, box checked. The covenant that matters is the one whose text answers three questions. First, does it expressly authorize enforcement by assignees or successors? If yes, the asset deal can carry it. If no, that employee’s covenant should be treated as non-transferable and priced accordingly. Second, what law governs and where must suit be brought — a Georgia-law covenant signed by a Florida employee raises its own enforceability questions that 542.335 will not solve. Third, is the restraint itself defensible in scope, because Florida’s reasonableness presumptions — including the seller-side presumptions discussed in the context of sale-of-business noncompetes — still apply once standing is established. A covenant the buyer can enforce but cannot win on is not worth much either.
The fix is cheap before closing and expensive after
Where the covenants are silent, the buyer has three practical repairs, in ascending order of reliability. It can require, as a closing condition, that key employees consent in writing to the assignment of their existing agreements — consent cures the (1)(f) problem for covenants already in place. It can fold the workforce issue into closing-date re-ups for key employees: new restrictive covenant agreements signed directly with the buyer, supported by fresh consideration such as retention bonuses or employment offers, which makes the buyer the original contracting party and takes assignment out of the analysis entirely. Or it can do both — assignments-plus-consents for the broad population, fresh agreements for the employees who actually carry the enterprise value. Sellers, for their part, should see this coming: a seller who audits its covenant files before going to market, and quietly amends the silent ones during the ordinary course of raises and promotions, is removing a diligence discount before the buyer finds it.
What does not work is the purchase agreement alone. A beautifully drafted assignment provision conveying all restrictive covenants to the buyer conveys, for the silent covenants, something Florida law treats as unenforceable in the assignee’s hands. The deal papers cannot manufacture the express authorization the employee never signed.
The takeaway
Florida will let a buyer stand in the seller’s shoes and enforce the workforce’s noncompetes — but only if each covenant expressly authorized enforcement by an assignee or successor, and only if the deal actually moves the covenant in a way the statute respects. In an asset deal, silence in the covenant means the restriction likely dies at closing no matter what the purchase agreement says. The buyer’s protection is textual and cheap: read every covenant during diligence, sort them into transferable and not, get consents or fresh agreements from the people who matter, and price whatever is left. The alternative is discovering the answer from a judge, after the customer list has already walked.
If you are buying a Florida business whose value rides on employee noncompetes — or selling one and want the covenant files cleaned up before diligence starts, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
