How do non-compete clauses work in German M&A?

A seller (especially a founder or key shareholder) is bound by a post-closing non-compete so they can't immediately set up or join a competitor and take customers, staff, or know-how — destroying the goodwill the buyer just paid for. To be enforceable in Germany the restriction must be reasonable in scope: limited in duration (the BGH/courts generally accept up to about two years post-closing — longer is likely to be cut down or void), in geography, and in the activity/sector, and proportionate to protecting the legitimate interest acquired. An overbroad non-compete risks being unenforceable. It's reinforced with non-solicitation (of customers and employees) and confidentiality covenants, and often backed by contractual penalties (Vertragsstrafe) to make breach costly and provable. Without it, a founder could legally compete from day one and hollow out the acquired business, so it's a standard and important protection — but it must be drafted within the legal limits to actually hold.