The seller of shares in a company breached non-compete covenants when he made loans and gave assistance to friends who were running rival businesses. The individual’s actions amounted to being “concerned” in those rival businesses.

The High Court’s judgment will be of interest to anyone looking to buy or sell a business or to raise private capital. It is also a salutary warning for individuals who are currently subject to non-compete restrictions, whether following a sale or an equity investment. 

What happened?

Spill Bidco Ltd and ors v Wishart and ors [2025] EWHC 2513 (Comm) concerned the sale of a group of manufacturing companies with operations in several countries, including the UK and Spain.

In December 2022, the founder of the business sold his shares in the group’s holding company to a group of companies ultimately owned by a private capital investor.

The acquiring group took the form of a typical private equity “stack”, comprising a “bidco” (which acquired the shares in the target business), a “topco” (which received the private capital investment) and two intermediate “midcos” (used for subordinated debt financing).

In connection with the sale, the founder entered into a share purchase agreement (SPA) with the bidco and an investment agreement with the topco. Each of those agreements subjected the founder to restrictive covenants, including obligations not to compete with the target group within defined territories during defined periods (three years under the SPA and 18 months under the investment agreement).

Importantly, the non-compete covenant in each agreement stated that the founder would not be “engaged […] concerned or interested” in any business that competed with the target group.

In late 2024, the target group’s Spanish subsidiary went into administration. Two of the Spanish subsidiaries’ employees (who had, by this time, become friends of the founder) subsequently became involved in a new Spanish venture supplying products similar to those supplied by the target group.

Out of friendship and sympathy for these individuals, the founder made a series of payments to one of them and to a company operating the new venture. He also facilitated introductions to suppliers and, in one email, described the new venture as a “sister” of the target group to add credibility.

Separately, one of the founder’s friends and acquaintances in the UK established a competing business in that country. The founder gave his friend advice on pricing and suppliers, and he allowed his friend’s competing business to store stock at premises owned by a separate company controlled by the founder.

The acquiring group brought legal proceedings against the founder, alleging that his actions amounted to breaches of the non-compete covenants in the SPA and the investment agreement.

It was clear that the founder had not become formally engaged in the competing businesses, in that he had not become an employee or taken office with either of them. Similarly, he had not taken any kind of participation or equity in either competing business, and so he had not become financially interested in either of them in that sense.

The key question for the court was whether the phrase “concerned in” was wide enough to include the funds the founder had advanced, as well as the assistance he had provided, to the competing businesses.

At the same time, the court analysed whether the non-compete covenants were reasonable and valid, or whether they went further than necessary and so were unenforceable as restraints of trade.

For more detail on when restrictive covenants are unenforceable, read our summary of a case where the High Court found that restrictive covenants in an investment agreement were too wide.

What did the court say?

The court found that the non-compete covenants were enforceable. They were common for a transaction of this kind, and were reasonable in scope, duration and geography, given the founder’s central role, his personal goodwill and the commercial context of a substantial sale where he had remained on the board as a non-executive director.

This decision paved the way for the court to consider whether the founder’s actions actually fell within the ambit of the non-compete covenants.

The judge noted that the phrase “concerned in” needs to be interpreted in the context of each individual contract, based on ordinary principles of contractual interpretation.

Previously, the courts had held that simply becoming a creditor of a competing business did not amount to being “concerned in” that business.

But that was so only where a person “passively” becomes a creditor, without taking any action. Where a person takes active steps to advance monies to a competing business, to the extent that they support, assist or intervene in that business, they may well end up becoming “concerned” in the competing business.

That principle – of taking positive steps to assist a competing business – could also apply where a person gives support to a competing business in ways that do not involve providing financing, taking an ownership stake or becoming involved in management.

Here, in relation to the Spanish business, the founder had made several payments in the knowledge they would fund the rival business’s operations. The court hinted that one or two single payments might not have cleared the threshold, but, when viewed cumulatively as a series of payments, the founder had clearly become involved in the competing business.

He had also provided the rival business with a measure of support and assistance in sourcing its products, including by providing names of potential suppliers, and he had falsely associated the rival business with the target group.

These actions had also served to benefit the rival Spanish business and were significant enough to mean that the founder had become “concerned in” that business.

In relation to the UK business, the founder has similarly provided details of suppliers and had given advice generally on running the competing business, including on product pricing.

Again, these actions had clearly benefited the competing UK business and meant the founder had become “concerned in” that business.

As a result, the founder had breached the non-compete covenants in both the SPA and the investment agreement.

The court did, however, find that certain other actions taken by the founder did not fall within the scope of the covenants. For example, by allowing his company to store the rival UK business’s products, the founder had merely been allowing that company to pursue its business. This did not mean the founder had become personally involved in the competing business.

What does this mean for me?

For buyers and investors, the decision underscores the importance of including well‑drafted restrictive covenants in investment and sale documentation. If crafted carefully, with an appropriate perimeter but sufficiently wide language, non-compete covenants can embrace – and potentially prevent – a wide range of behaviour.

For anyone subject to a non-compete covenant – be they an exiting founder or seed investor, a manager or director, or an employee – the decision is a cautionary tale. What may seem like harmless, friendly and generous assistance can cross the line into breach of contract.

So long as the non-compete covenant is in force, an individual should assume that any interaction with a competing business may well be restricted, and so refrain. It will then be necessary to test any proposed actions against the language of the non-compete covenant, read in the context of the commercial transaction as a whole, to decide whether it is restricted.

In all cases, there is no substitute for taking professional legal advice.

The decision is a useful reminder of some key practical points when negotiating restrictive covenants.

• Be explicit about prohibited activities. Layering concepts, such as “engaged in”, “concerned in” and “interested in” can help to broaden the covenant without necessarily rendering it unenforceable. Referring to specific activities, such as “holding shares in”, “providing finance to”, “providing advice to” and “otherwise supporting” can reduce the scope for arguments that particular activities fall outside the covenant.
• Tie the covenant to the target’s operations. A covenant is more likely to be reasonable if it only restricts activities that will actually compete with the target group’s business. In some cases, such as with start-ups and early-stage businesses, with careful drafting, it may be possible to expand the scope of the covenant to pipeline projects.
• Link duration to commercial need. On the sale of a business, periods of two to three years after completion are fairly common and are usually reasonable. However, the context is important – longer covenants have been upheld in the past, but, equally, in some cases a covenant may need to be shorter to be reasonable.
• Consider the context. Depending on the nature of the transaction, an individual may find themselves subjected to multiple sets of restrictive covenants – for example, in a share sale agreement, in an investment agreement, and in an employment or service contract. These covenants all serve slightly different purposes and may benefit different companies. They will need to be appropriately calibrated to ensure they can be justified on a stand-alone basis.
• Align documents. That said, if there are multiple agreements, it can help to ensure that defined terms and enforcement mechanics are coherent, and that restrictive covenants are given expressly for the group companies’ benefit. This may aid the court in understanding the commercial rationale for the covenants and, hence, to assess whether they are reasonable.

Access the High Court’s decision that providing funds and advice to competitors fell within the scope of non-compete covenants