Noncompetes come up in several business contexts. A few examples:

• Introductions to people or deals: Here, a “Noncompete/Noncircumvent” agreement is usual, with both sides promising not to do a deal with other people they introduce to each other, or to do a deal without the other’s permission,  and not to use information they receive from each other in connection with the deal outside of the deal. This allows negotiation on any referral fees (if legal for the deal type or deal professional), terms and pricing of the deal transaction or transactions, and other arrangements needed to complete the deal or deals.
• Business Earn-Outs:  Entrepreneurs who sell a business often receive an “earn-out” over and above any cash at closing. These contracts routinely contain noncompete agreements so the seller doesn’t just start doing business again with the same team and customers right after selling the business opportunity. Some states don’t allow noncompetes that don’t result from sale of a business.
• Employee Contracts: These are the most common, and most problematic. Illinois courts require that they be reasonable in time (no more than two years, according to one recent case), scope (only enough to protect the employer against direct competition, not all industries or job functions the employee could try to work in after leaving), and geographic area (just the marketplace the employer and employee work in, not everywhere.)

All noncompetes interfere with commerce and restrict free employment, so courts read them fairly strictly. The “trade secrets” they protect have to be real secrets, not things easily found in a phone book or commercial mailing list. The “no-poaching” rules can limit taking some other employees away, but not forever, and not all of them. The employer has to give real compensation for adding a noncompete, not just continued employment.