The FTC non-compete ban — status, the five steps, and why M&A non-competes are preserved.

The FTC ban is a regulatory development that has caused significant uncertainty across U.S. industries. For agency M&A specifically, the picture is clearer than for other sectors: the sale-of-business exemption preserves non-competes in seller agreements, and the agency industry's reliance on non-solicitation rather than broad non-competes insulates it from much of the ban's impact. The forward-looking insight: strengthen the non-solicitation / non-piracy stack and consider synthetic equity as a retention tool.

§ 01 · What the ban would doThe three core changes if it survives.

If the ban survives final adjudication, three changes apply. No new non-compete clauses with workers — except in limited circumstances, most notably the sale-of-business exemption that preserves M&A non-competes. No enforcement of existing non-competes unless they cover "senior executives," which the FTC defines narrowly. Notice requirement — employers must provide notice to both current and former workers that their non-competes are no longer enforceable.

§ 02 · The three pending lawsuitsWhat determines the final outcome.

Ryan v. FTC (Texas). U.S. Chamber of Commerce and other business organizations intervened as plaintiffs. The court issued a preliminary order stopping the ban from taking effect — but only as to the five entities in the case. It refused to extend the order to employers nationwide.

ATS v. FTC (Pennsylvania). The court concluded that the ban is likely a lawful exercise of FTC authority — directly contradicting the Ryan decision.

Properties of the Villages v. FTC (Florida). A preliminary motion to stop the ban was pending at publication of the source materials.

The legal forecast suggested it was likely the ban would ultimately be struck down by one of the courts — but no certainty. The implication for agencies: prepare for both outcomes.

§ 03 · The five steps to take regardlessThe defensive checklist.

1. Identify which current and former employees have non-competes and will be subject to the notice requirement.

2. Identify who meets the FTC's definition of "senior executives." These individuals will not receive the notice. The FTC's definition is narrow.

3. Discuss with counsel what the notice should say. The FTC has published a sample notice, but it may not be right for every business. Prepare notices but do not send them yet — wait for the litigation outcomes.

4. Ensure other contract provisions not covered by the ban are legally enforceable and as strong as possible: customer non-solicitation, non-recruiting (don't recruit former colleagues), and non-disclosure (NDA) clauses.

5. Consider rewarding performance and enhancing retention by creating synthetic equity incentive programs for producers and employees.

§ 04 · Why the ban affects insurance brokerage less than other industriesThe non-solicitation insulation.

The insurance brokerage industry's reliance on non-solicitation rather than broad non-competes provides natural insulation. Non-solicitation prohibits soliciting customers or employees but does not prevent the employee from working in the industry. The FTC ban targets non-competes specifically; non-solicitation agreements remain enforceable.

The corollary: brokers who relied on broader non-compete clauses (especially with mid-level producers) need to migrate to non-solicitation + non-piracy + non-recruiting structures. Industries more dependent on broad non-competes (tech, consulting) face larger transition costs than the agency industry.

§ 05 · The synthetic equity pivotWhy step 5 matters most.

The strategic insight in step 5: even if non-competes survive the legal challenges, regulatory uncertainty around them makes them less reliable as a retention tool. Synthetic equity programs — phantom stock, equity appreciation rights, deferred compensation tied to firm value — create economic incentives for producers and employees to stay and perform without depending on enforceable non-competes for retention.

This is consistent with the broader perpetuation strategy in the industry. Synthetic equity serves as an Agility lever in the Four-Attributes framework — adaptive ownership-transition tooling rather than coercive employment restriction. Regulatory pressure on non-competes accelerates the trend regardless of the FTC outcome.

§ 06 · The M&A implicationsWhat sellers and buyers should do.

M&A non-compete preservation. The sale-of-business exemption is critical. Even under the FTC ban, non-compete provisions in seller agreements are preserved. Agency M&A deal documentation can confidently include non-compete clauses for selling shareholders without regulatory risk.

Producer retention pre-sale. Sellers preparing to list need to make sure their producer-retention strategy survives FTC volatility. Synthetic equity programs become more important pre-sale as part of value preparation. Buyers underwrite books in part on producer retention — sellers with synthetic equity in place credibly defend higher retention assumptions.

Listing-quality signal. Listings backed by current non-piracy / non-solicitation agreements (rather than legacy non-compete agreements that may face enforceability challenges) signal lower buyer risk. The covenant infrastructure is itself a piece of due-diligence evidence.

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