{"ok":true,"canonical_url":"https://dealroom.so/glossary/restrictive-covenant","api_url":"https://dealroom.so/api/public/glossary/restrictive-covenant","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"restrictive-covenant","term":"Restrictive covenant","group":"Doing the deal","definition":"A clause in a contract that limits a party's actions, such as a non-compete agreement preventing the seller from opening a similar business nearby. These protect your newly acquired business.","what_it_means":"In an acquisition, common restrictive covenants include non-compete clauses, non-solicitation clauses (preventing the seller from poaching employees or customers), and confidentiality agreements. These are crucial for protecting the goodwill and value you're purchasing. Ensure these covenants are clearly defined, reasonable in scope and duration, and enforceable.","url":"https://dealroom.so/glossary/restrictive-covenant","official_sources":[],"related":[{"slug":"non-compete","term":"Non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"earnout","term":"Earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"nda-buyer-verification","term":"NDA","url":"https://dealroom.so/glossary/nda-buyer-verification"}],"related_questions":[{"question":"How does a lender ensure the loan covenants in the authorization are accurately reflected in the loan documents?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-the-loan-covenants-in-the-authorization-are-accurately-reflected-"},{"question":"What specific financial covenants or conditions must be included in a seller note on full standby for a 7(a) acquisition loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-financial-covenants-or-conditions-must-be-included-in-a-seller-note-on-full-"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Restrictive covenant","url":"https://dealroom.so/glossary/restrictive-covenant","source_type":"DealRoom Data"}}