Don’t Steal Deals BroJune 4, 2015 | By: Sean Murray
It’s a scenario that’s become all too common in the merchant cash advance industry. An employee quits or gets fired and within weeks they begin soliciting all the previous clients they worked on for revenge… or money… or both.
Maybe they signed an agreement that was supposed to prevent this or maybe they didn’t. In my own personal perspective, it shouldn’t matter.
Don’t steal deals bro
If you’re as good a closer as you think you are, your new ISO shouldn’t rely on stealing deals from the last company you worked at. On the one hand you will be taking time away from what’s important, and that’s creating a long term business model. Stealing deals might generate some nice checks but it’s not a business. A ton of new ISOs fail and that’s because they have no idea how to generate new deals. I guess you’re not a closer bro…
On the other hand, stealing deals will permanently burn an industry bridge at best and get you sued at worst. The one thing harder than starting a new business is starting a new business while there is someone out there actively trying to make you fail.
Don’t sue me bro
If you signed an agreement with a non-solicit clause, you probably shouldn’t solicit. Several companies in the industry have used the court system to try and enforce non-solicits or non-competes (no matter how weakly worded) against former employees. Some of these lawsuits have dragged on for years and likely cost the alleged contract breachers hundreds of thousands of dollars just to defend themselves.
There’s a way around this and that’s to negotiate with an employer to amend the agreement prior to your employment there. If they won’t bend on certain clauses like non-competes, then chances are if you go ahead and sign anyway, they are going to try and enforce it even if they end up not succeeding.
“ISOs must always think about the possible consequences under their agreements for moving merchants,” wrote Adam Atlas in a recent Green Sheet article that applies almost equally to the merchant cash advance industry.
Atlas goes on to explain however, that enforcing a non-solicitation could backfire, in the sense that if the ISO feels its trivial or unwarranted, they could escalate their efforts to move deals away. They’ll probably also feel inclined to spread the word and spook the company’s other ISOs. That could really come back to bite.
Be sure to read ISO Legal Blunders by Adam Atlas on the Green Sheet.
Thinking about stealing deals? Consider the legal stuff bro.Last modified: June 4, 2015
Sean Murray is the founder of deBanked, a 10-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.