In June 2025, New York Venture Hub published “The Forfeited Equity Trap: Why Your Non-Compete Might Be Worthless”. In that post, I blogged that the Delaware Court of Chancery’s decision in North American Fire Ultimate Holdings, LP v. Doorly served as a cautionary tale that an equity-based non-compete could become unenforceable if the equity
forfeiture
The Forfeited Equity Trap: Why Your Non-Compete Might Be Worthless
By Alon Y. Kapen on
Imagine you’re a private equity firm. You buy a company, and you want to retain and incentivize key employees, so you give them some equity in the form of incentive units. You also want to prevent them from running off and competing against you, so you impose restrictive covenants on them with a forfeiture provision.