Restrictive Covenants

Definition

Contractual obligations that restrict a party — typically a seller, key employee, or business partner — from engaging in specified competitive or conflicting activities for a defined period and within a defined scope. Restrictive covenants including non-competes, non-solicitation, and non-dealing clauses are recognised as identifiable intangible assets in purchase price allocation where they are enforceable, have measurable economic value, and protect the acquirer's ability to retain revenue and talent post-transaction.