General Electric (GE) this week is expecting bids for its middle-market lending unit, called Antares, which reportedly could fetch upwards of $16 billion. Around a dozen suitors expressed initial interest, including Ares Management (which already has a partnership with GE Antares), Apollo Global Management (APO), The Blackstone Group (BX) and Kohlberg Kravis Roberts & Co. (KKR).
But, as The Wall Street Journal first reported yesterday, GE has required that any bidder signing the non-disclosure agreement must also agree to not hire any “key” Antares employees until after the deal is closed. To be clear, this is not a non-solicitation clause. It’s a non-hire, even if the bidder was in prior negotiations with the individual or if the bidder already had an active search underway via a third-party recruiter.
From GE’s point of view, this is about price maximization. The company wants to sell Antares as an ongoing business, not as a bucket of financial assets (as it largely did for GE Capital’s real estate business). So an outflow of key personnel would be problematic and, arguably, could hurt the prospects of those left behind.
For employees, however, the requirements could severely limit job mobility. One big reason is that GE isn’t giving bidders any visibility into what “key” means, vis-à-vis its employees. In the rare cases where non-hire agreements are used, they tend to specify particular employees or job titles. For example, everyone at managing director and above is off-limits. In this case, however, there’s a bit of buyer beware. Is it only C-suite? All investment professionals? The guy who keeps the urinals smelling fresh? GE isn’t saying. Without clarity, what potential employer is going to take on the potential liability?
The only apparent option an Antares employee has is to quit his or her job, and then hope that an offer sheet is forthcoming from elsewhere. Not the sort of risk that most people are likely to take (without the sort of assurances that would, of course, violate the NDA).
A GE spokeswoman declined to comment.
Get Term Sheet, our daily newsletter on deals and deal-makers.
