This article is part of our complete legal guide to selling a medical practice.
If you are an employed physician reviewing a non-compete in an employment contract, start with our guide to physician non-compete clauses. This article focuses on covenants given as part of a sale.
Why are sale non-competes treated differently?
A buyer that pays for a practice's goodwill is paying for patient relationships and reputation the seller built. Many jurisdictions therefore distinguish genuine sale covenants from employee covenants and may allow greater latitude to protect the goodwill purchased, subject to each jurisdiction's statutes, reasonableness requirements, and public policy. That greater latitude is not unlimited. Courts still look at whether the restriction reasonably protects the goodwill purchased.
How many non-competes will I sign?
| Document | Typical restriction | Key question |
|---|---|---|
| Purchase agreement | Sale covenant tied to the goodwill sold | Does its length and territory match the practice's actual market? |
| Employment agreement | Covenant running from the end of employment | Will it be judged as an employment covenant, and when does it start? |
| Equity or operating agreement | Covenant tied to owning platform equity | Does it extend the restriction for as long as you hold equity? |
When these covenants overlap, a physician can be restricted for much longer than any single document suggests. The definitions and start dates should be read together.
What should physicians negotiate?
- A territory based on where the practice actually draws patients, not a broad radius around every platform location
- A duration tied to the goodwill sold, with a clear start date
- A scope limited to the specialty and services you actually provide
- Carve-outs for academic, charitable, telehealth, or locum work where appropriate
- Consequences if you are terminated without cause or the buyer breaches its obligations
What about Virginia and North Carolina?
Virginia changed significantly in 2026. For agreements entered into or renewed on or after July 1, 2026, Va. Code § 40.1-28.7:8 generally prohibits employers from entering into, enforcing, or threatening to enforce non-competes with health care professionals, a term that includes physicians licensed by the Virginia Board of Medicine. The 2026 act does not itself invalidate covenants entered into or renewed before that date. The statute preserves a covenant given in the sale of a business by a health care professional or that professional's business entity, where the transaction includes all or substantially all of the operating assets and goodwill, or the specified ownership interest, and the covenant is reasonable in scope, duration, and geography. That exception covers the sale covenant. It does not automatically validate a separate non-compete in your post-closing employment agreement. Virginia courts also examine the restricted activity, territory, and duration and do not rewrite overbroad covenants.
In North Carolina, courts give sale covenants more latitude but follow a strict blue pencil rule, so an overbroad restriction can fail entirely. North Carolina courts have also declined to enforce some physician covenants at the preliminary injunction stage where the evidence showed a substantial question of harm to public access to care (Iredell Digestive Disease Clinic v. Petrozza, 1988; Statesville Medical Group v. Dickey, 1992). In Kennedy v. Kennedy (2003), the Court of Appeals treated a selling dentist's continued-service and restrictive covenant agreements as part of an integrated sale and directed entry of a preliminary injunction enforcing a covenant that ran until three years after he stopped working for the buyer. Other states have their own rules. Massachusetts and Delaware, for example, void many physician non-competes and contain no express sale exception, while Rhode Island, Tennessee, Pennsylvania, Colorado, and Minnesota include sale-of-practice or sale-of-business provisions with their own conditions, and Texas imposes detailed physician-specific limits. The governing state's current law should be confirmed for every transaction.
Related guides
- Selling a Medical Practice: The Complete Legal Guide (start here)
- 7 Common Mistakes Physicians Make When Selling a Practice
- Selling Your Practice to Private Equity
- What Is an MSO?
- How to Value a Medical Practice
- The Corporate Practice of Medicine in a Practice Sale
- Stark Law and the Anti-Kickback Statute in a Practice Sale
- Letters of Intent When Selling a Medical Practice
- Rollover Equity: What Physicians Should Know
- Your Employment Agreement After Selling Your Practice
- F Reorganizations in a Medical Practice Sale
- Due Diligence When Selling a Medical Practice
- Selling to a Hospital, Private Equity, or Another Physician
About Med Contract Law. Med Contract Law is a focused practice group of McCormick Law & Consulting dedicated to physicians. We represent physicians and physician-owned practices in practice sales, private equity and MSO transactions, and hospital acquisitions. In these matters, we represent the physician side, not hospitals or health systems, so our focus is always on the physician's side of the deal.
If you are selling your practice, have every restrictive covenant in the deal reviewed together. Schedule a confidential consultation to talk through your situation.
Unfamiliar with a term? See our physician contract and practice sale glossary.
Frequently asked questions
Will I have to sign a non-compete when I sell my practice? Almost always. Buyers pay for goodwill and want protection against the seller competing for the same patients.
Are sale non-competes easier to enforce? Often. Many jurisdictions give genuine sale covenants more latitude than employee covenants, but the covenant must still be reasonable, and physician-specific statutes and patient-access concerns can narrow that latitude.
Can a non-compete outlast my employment? Yes. Employment covenants usually run for a period after employment ends, and equity covenants may run as long as you hold equity.
Do state physician non-compete laws apply to sales? It depends on the state. Some statutes exempt or treat sale covenants differently. Confirm the current law of the governing state.