When a managing director resigns, the vice presidents and associates who worked most closely with them often wonder whether they will be asked to follow. In many cases they are not, and even when they are, whether they can make the move depends on factors largely outside their control. Senior hiring has picked up across the Street this fall, and more bankers are finding themselves in this position.
Often, the answer depends less on the offer itself than on the employment agreement a banker has already signed. This article looks at how team moves typically work in the U.S., what non-competes and non-solicits restrict in practice, and when staying may be the stronger career move.
Important: Prospect Rock Partners is a recruiting firm, not a law firm, and nothing in this article is legal advice. The cases, statutes and contract terms discussed below are summarized from publicly available sources for general background only. They have not been reviewed by an attorney, may be incomplete or out of date, and may not apply to any particular situation. Bankers should consult their own employment counsel before making any decision.
The legal stakes can be significant. According to public court records, Perella Weinberg sued four restructuring partners who left in 2015 to found Ducera Partners, and in August 2024 a New York appeals court allowed parts of that case to proceed, holding that the firm’s employee non-solicit was enforceable.
Why Banks Hire in Teams
Hiring a team allows a bank to enter or expand a business more quickly than a single senior hire would. Bankers who already share clients, deal history and working habits can begin pitching and executing together almost immediately.
Recent U.S. moves illustrate the three most common structures:
- Senior pairs. Evercore hired John Song and Jean Stack, co-heads of Baird’s defense, space and government practice, as senior managing directors in the Washington, D.C. area.
- Coordinated group builds. JPMorgan added three natural resources bankers at once, including Christopher Dahan from Perella Weinberg’s TPH & Co. in Houston and Greg Kantrowitz from Citi in New York.
- Firm acquisitions. William Blair acquired debt advisory boutique Armentum Partners, with all of Armentum’s professionals expected to join and a new Menlo Park office to follow.
Full lift-outs, in which an entire desk moves from one bank to another, are less common and carry the most legal risk. In 2007, Calyon sued Mizuho in Manhattan federal court for $750 million over the move of a cash CDO team, naming all 11 bankers who left as defendants.
Who Is Asked to Follow
A departing MD typically brings the people needed to keep client coverage running from the first day, which usually means one or two VPs or associates rather than an entire team. The hiring bank decides how many seats it is willing to fund, and the MD decides who fills them.
In our experience, the bankers who receive that call tend to share several characteristics:
- They lead execution on the MD’s key relationships. The hiring bank is paying for those relationships, and these bankers keep the deals moving.
- They bring expertise that is hard to replace. Deep sector knowledge, a product specialty or a regional client base makes them part of the pitch.
- They are approaching promotion. A title step is often part of the package and can make the decision easier.
- They have earned the MD’s trust. Team moves are planned before anyone resigns, so discretion matters.
Bankers who are not asked should not read too much into it. The decision is more often about headcount than ability, and many hiring banks will fund one follower rather than three.
Often, the Decision Is Not the Banker’s Alone
It is natural to frame a team move as a personal choice, but in practice the outcome often depends on factors outside a follower’s control. Even a banker who wants to follow may find that the move cannot happen, or cannot happen yet.
In our experience, the most common constraints include:
- The MD’s own restrictions. An employee non-solicit, or similar terms in an equity award agreement, may prevent the MD from approaching or helping to hire former colleagues.
- The banker’s own agreements. A non-compete, notice period or non-solicit can delay a start date or rule out certain firms altogether.
- The hiring bank’s appetite. The new firm may fund only one seat, may be unwilling to take on the legal risk of hiring an MD’s former team, or may be bound by a no-hire provision.
- Deferred compensation. If the hiring bank will not buy out unvested awards, the move may not make financial sense.
- Timing. Once the MD resigns, the window to move together may close.
- Work authorization. Bankers who require visa sponsorship depend on the hiring bank’s willingness to support a transfer.
- The current employer’s response. A bank may place a departing banker on garden leave, enforce its agreements or make a counteroffer.
The practical takeaway is that bankers should understand these constraints early, ideally before a move is ever discussed, so that they can make an informed decision when the opportunity arises.
How a Follower’s Offer Differs From the MD’s
The MD negotiates first and typically receives the most attention. A follower’s offer, however, is a separate agreement with its own terms, and it should be negotiated on its own merits rather than assumed to mirror the MD’s.
| Term | Typical MD offer | Typical follower offer | What followers should seek |
|---|---|---|---|
| Title | Equivalent or a step up | Often equivalent; a promotion is the main lever | A title change in writing, with an effective date |
| First-year compensation | Frequently a guaranteed year-one bonus | Guarantees less common or smaller | A guaranteed or minimum year-one bonus |
| Forfeited deferred compensation | Bought out, often in the new firm’s stock | Sometimes bought out only in part | A full buyout on the original vesting schedule |
| Start date | Set around the MD’s notice period | May differ from the MD’s | Compensation through any gap between roles |
| Reporting line | Group or regional head | The MD | Clarity on reporting if the MD departs again |
Deferred compensation is often the largest figure a follower risks leaving behind. Bankers paid partly in stock should confirm what vests before a move, what would be forfeited on resignation, and whether the new firm will replace it on the same schedule.
The recently abandoned Perella Weinberg–Piper Sandler merger underscores how much these terms matter. Semafor reports the deal fell apart after senior bankers rejected retention packages of $2.5 million in stock for top producers and $500,000 to $1.5 million for other partners, vesting over as long as three years. VPs and associates should review their own vesting schedules just as carefully.
Non-Competes
There is currently no federal ban on non-compete agreements, so state law governs. The FTC’s 2024 rule prohibiting most non-competes was blocked by a Texas federal court in August 2024. The FTC withdrew its appeal in September 2025 and formally removed the rule in February 2026, and it now addresses non-competes on a case-by-case basis.
A non-compete restricts an employee from working for a competitor for a defined period after leaving. Many investment bankers never sign one. Banks more commonly rely on notice periods, non-solicits and the forfeiture of deferred compensation, which we cover below. Non-competes appear more often at hedge funds, at some boutiques and in senior or partner-level agreements.
For bankers who are bound by one, the state where they work and the governing law named in the contract are generally the most important factors. The summary below is drawn from published legal commentary as of mid-2026, is intended only as a general overview, and should be confirmed with counsel, as state law changes frequently:
| State | How non-competes are treated for most investment bankers |
|---|---|
| New York | Enforced only if reasonable under BDO Seidman v. Hirshberg (1999): the restriction must protect a legitimate business interest, must not impose undue hardship and must not harm the public. A proposed ban exempting earners above $500,000 passed the State Senate 40–21 in June 2026, but the Assembly did not vote on it, so it is not law. |
| California | Void under Business & Professions Code Section 16600, even if signed in another state. Employers that attempt to enforce one can be sued. |
| Florida | The CHOICE Act, in effect since July 2025, permits non-competes and garden leave of up to four years for employees whose base salary exceeds twice their county’s mean wage. Courts must grant the employer a preliminary injunction, and the employee bears the burden of showing the restriction should not apply. |
| Texas | Enforced if ancillary to an otherwise enforceable agreement and reasonable in duration, geography and scope. |
| North Carolina | Enforced if in writing, supported by consideration and reasonable. |
| Massachusetts | Limited to 12 months, requires garden-leave pay or other agreed consideration, and generally unenforceable against employees who are laid off. |
| Illinois | Prohibited only for employees earning under $75,000 ($80,000 from 2027), so most bankers remain subject to a reasonableness review. |
| Washington, D.C. | Prohibited for employees earning under approximately $162,000 in 2026, so most bankers can be bound. |
| Washington State | All non-competes become unenforceable as of June 30, 2027. |
Florida deserves particular attention. As banks and investment firms have expanded in Miami, more bankers are signing Florida agreements that can keep them out of the market for several years, with the burden on the banker to challenge the restriction. For background, see Florida’s CHOICE Act: How One State Could Reshape National Non-Compete Policy.
Non-Solicits
In a team move, the non-solicit is often the clause that matters most. Unlike a non-compete, it does not prevent anyone from changing jobs; it restricts a departing banker from bringing colleagues or clients along. These agreements generally take two forms:
- Employee non-solicits prohibit a departing banker from recruiting former colleagues for a set period. If an MD has signed one, they may be barred from approaching their team once they resign.
- Client non-solicits prohibit a departing banker from pursuing specified or former clients, and may extend to prospective clients the banker pitched.
According to published legal commentary, New York courts have generally viewed non-solicits as less restrictive than non-competes and enforced them more often, applying the same BDO Seidman reasonableness test. Protecting client relationships and confidential information are recognized as legitimate interests; avoiding the cost and disruption of departures, on its own, is not.
The Perella–Ducera litigation illustrates how these provisions can play out. Based on the published appellate decision, the court held Perella’s employee non-solicit enforceable. It dismissed client claims involving Monsanto and Caesars, where the evidence showed no solicitation, but allowed claims involving Fidelity and creditors of Alpha Natural Resources to proceed. The court cited evidence that Michael Kramer told a Fidelity executive, before leaving, that colleagues would be joining him.
What Counts as Solicitation
Non-solicits are usually drafted broadly. Goldman Sachs’ form of restricted stock unit award agreement filed with the SEC in 2025, for example, defines “solicit” as “any direct or indirect communication of any kind whatsoever” that encourages someone to act. That language can reach a call made through a headhunter, a suggestion passed along by a colleague, or a well-timed lunch.
Who made the first contact is not always decisive. In Corporate Technologies v. Harnett (2013), as summarized in published commentary, a federal appeals court rejected the argument that a departing employee was in the clear simply because clients contacted him after his new firm sent out a targeted announcement. Courts look at the full sequence of events, so bankers should assume that informal signals to colleagues or clients can be scrutinized later.
Non-Solicits in Equity Awards
Many bankers focus on their employment agreement and overlook the restrictions in their equity award agreements, which can carry a more immediate penalty. Under the terms of that publicly filed form agreement, a banker who solicits clients or colleagues before their restricted stock units are delivered forfeits all outstanding units, vested or not, and may have to repay shares already delivered.
These provisions can extend beyond recruiting itself. Goldman’s agreement also covers participating in another firm’s hiring of covered colleagues, including identifying candidates or taking part in hiring decisions, and the hiring of those colleagues into a group the departed banker will manage, unless the firm concludes the banker was not involved. Because the restriction runs until each award is delivered, it can last for years after a banker leaves. For a departing MD, interviewing or approving a former team member can put unvested compensation at risk, which is one reason MDs are often reluctant to bring anyone along after the fact.
Duties While Still Employed
An MD who is still on the payroll owes a duty of loyalty to their current firm, whatever their contract says. Under New York’s faithless servant doctrine, an employee who acts disloyally can forfeit the compensation earned during the period of disloyalty. In Young Adult Institute v. The Corporate Source (2018), as reported in published commentary, a New York court allowed such a claim to proceed against employees who, while still employed, recruited colleagues and set up a competing business. Planning a team move while still employed therefore carries risk on its own, separate from any non-solicit.
No-Hire Provisions
A related clause, the no-hire provision, restricts a firm from hiring another firm’s employees. These appear in some settlements, joint ventures and acquisitions, and can bind a hiring bank even when the individual banker has signed nothing. Followers should ask whether any such restriction applies to the hiring bank before investing time in a process.
Why Timing Is Critical for Followers
In practice, a non-solicit can make it very difficult for a follower to join an MD later. Unless a banker is recruited at the same time as the MD, the window may close once the MD resigns. From that point, and for as long as the clause runs, the MD cannot recruit the team, either directly or through a search firm.
Hiring banks are often cautious as well. Bringing on a banker who appears to have been steered there by the MD can invite litigation against the bank, the MD and the new hire, so some firms will avoid the MD’s former team until the restriction expires.
For these reasons, followers are usually recruited alongside the MD while the move is being negotiated, and the approach should come from the hiring bank rather than the MD. An MD who is still employed owes duties to their current firm, and in the Perella case the court focused closely on what Kramer said to others before he left.
Bankers who miss that window may need to wait for the restriction to lapse, although reunions do happen. After Song and Stack moved from Houlihan Lokey to Baird in 2018, a former colleague from their Houlihan group joined them at Baird three years later.
Followers who are interested in joining a former MD should keep the process clean. Approaching the hiring bank independently or through their own recruiter, keeping a record of how the conversation began, and asking the hiring bank directly whether the MD is subject to restrictions can all reduce the risk for everyone involved.
California is reportedly a notable exception. In AMN Healthcare v. Aya (2018), a state appeals court voided an employee non-solicit under the same statute that voids non-competes, and courts there have increasingly followed that reasoning. Misusing a former employer’s trade secrets to win clients, however, remains unlawful.
Notice Periods, Garden Leave and Deferred Compensation
For most U.S. investment bankers, the practical constraints on a move are the notice period and the deferred compensation forfeited on resignation.
Notice periods and garden leave. Many senior agreements require a set period of written notice before departure, during which the bank continues to pay salary but may remove the banker from client work. Courts can be reluctant to compel someone to remain in a job, however. In Bear Stearns v. Sharon (2008), as described in published commentary, a top Boston producer resigned without serving his 90-day notice period and joined Morgan Stanley the next day. The court found Bear Stearns likely to succeed on its breach-of-contract claim but declined to issue an injunction, concluding that money damages would be sufficient. Florida appears to be an outlier: as summarized by law firm commentary, the CHOICE Act permits paid notice periods of up to four years and requires courts to enforce them through injunctions.
Deferred compensation. Unvested stock and deferred cash are typically forfeited on resignation, and plans often specify forfeiture when an employee joins a competitor. New York enforces these provisions under the employee choice doctrine without a reasonableness review, on the basis that the employee chose between keeping the compensation and leaving to compete. In Morris v. Schroder Capital Management (2006), according to published summaries, New York’s highest court upheld a senior vice president’s forfeiture after he resigned to launch a competing fund. The doctrine generally does not apply when an employee is terminated without cause.
As a result, the buyout of deferred compensation is often the most important term in a follower’s offer, and the timing of a resignation relative to vesting dates and bonus payments deserves careful planning. For more on how banks approach deferred pay in lateral hiring, see Why Banks Are Still Gun-Shy on Clawbacks.
Practical Considerations
Most investment bankers are FINRA-registered, and disputes between registered employees and their firms generally proceed to FINRA arbitration. A bank may still seek a temporary injunction from a court while the dispute is pending, and if one is granted, the arbitration hearing on permanent relief must begin within 15 days. Because the departing firm files a Form U5 and the new firm registers the banker, a move also becomes visible quickly.
Bankers considering a move should:
- Obtain copies of their employment agreement, offer letters and all deferred compensation plans before discussions become serious.
- Have those documents reviewed by their own employment counsel, rather than relying on counsel for the hiring bank or the MD.
- Ask the hiring bank, in writing, whether it will cover legal costs if the current employer brings a claim.
They should avoid:
- Discussing the move on work email, phones or messaging platforms.
- Taking client lists, models, pitch materials or deal files, including their own work product.
- Contacting clients about the move before departing and serving any notice period.
- Recruiting other colleagues if they are bound by an employee non-solicit.
The Case for Staying
An MD’s departure creates an opening, and the bankers who remain are often best positioned to fill it. Clients still require coverage, and the bank has every incentive to retain them, which can translate into expanded client responsibility and a faster path to promotion.
RBC offers a recent example. After Mark Maroney departed as head of global spread products, the bank divided his business in two, and existing leaders Rob Jones and Eric Wise took on a new Securitization and Financing business on an interim basis.
Staying may be the stronger choice when:
- Client relationships rest with the bank rather than the MD, for example where coverage depends on the bank’s balance sheet or league-table position.
- A promotion or significant vesting date is approaching, since leaving could cost a year of progress and compensation that cannot be recovered.
- The new platform is unproven, because a team hired to build a business faces pressure to generate fees quickly, and newer seats are the most exposed if it does not.
- The current bank presents a credible counteroffer, which should be judged on title and long-term compensation rather than a one-time retention payment.
Conclusion
Following an MD can accelerate a career, but the decision is often shaped as much by existing contracts, the hiring bank’s position and timing as by the banker’s own preference.
Retention bonuses add another layer. When an MD leaves, the current bank may offer retention awards to keep the rest of the team in place, while the hiring bank may offer sign-on or buyout packages to bring followers over. These awards typically vest over time and may have to be repaid if the banker leaves early, so they can tie a banker to a firm as tightly as any of the agreements discussed above. The collapse of the Perella Weinberg–Piper Sandler merger, in which senior bankers reportedly rejected retention packages vesting over as long as three years, shows how closely bankers weigh these terms.
Before accepting a retention bonus, bankers should understand how long it commits them to the firm, what triggers repayment, and how it compares with what a hiring bank is offering. More broadly, bankers weighing a move should understand their obligations early, consult counsel, and evaluate the case for staying with the same rigor as the case for leaving.
Prospect Rock Partners works with bankers on lateral moves and team transitions, including how follower offers are typically structured and how to evaluate a counteroffer.
Sources
- John Song and Jean Stack join Evercore as senior managing directors (Evercore, 10/12/2026)
- JPMorgan adds three bankers to natural resources team (Bloomberg via Investing.com, 9/29/2026)
- William Blair expands investment banking platform with acquisition of Armentum Partners (William Blair, 10/19/2026)
- RBC’s credit hire from BofA, and a senior departure (eFinancialCareers, 10/20/2026)
- Lowball retention bonuses doomed the Perella–Piper Sandler merger (Semafor, 10/16/2026)
- Noncompete agreements in 2026: a federal and state overview (Foley & Lardner, July 2026)
- Removal of the Non-Compete Rule (Federal Register, 2/12/2026)
- New York noncompete ban bill: what employees should know (2026)
- Florida CHOICE Act summary (Winston & Strawn, 2025)
- Perella Weinberg Partners LLC v. Kramer (N.Y. App. Div., 1st Dept., 8/29/2024)
- Enforceability of employee non-solicit and no-hire provisions under New York law (Cowan, Liebowitz & Latman)
- AMN Healthcare v. Aya Healthcare (Davis Wright Tremaine, 11/2018)
- Bear Stearns v. Sharon (Goodwin, 4/2008)
- Morris v. Schroder Capital Management (N.Y. Court of Appeals, 2006)
- FINRA Rule 13804: temporary injunctive orders (FINRA)
- Calyon sues Mizuho over CDO team lift-out (Risk.net, 2007)
- Goldman Sachs form of year-end RSU award agreement (SEC filing, 2025)
- Corporate Technologies v. Harnett: employees, don’t play cute with non-solicitation obligations (Fisher Phillips, 10/2013)
- Young Adult Institute v. The Corporate Source: faithless servant doctrine (2018)
Disclaimer: Prospect Rock Partners is an executive search firm, not a law firm, and does not provide legal advice. This article is for general informational purposes only. Descriptions of court decisions, statutes, regulations and contract terms are based on publicly available summaries, have not been independently verified or reviewed by counsel, and may be incomplete, out of date or inapplicable to a specific situation. Readers should consult a qualified employment attorney about their own agreements and circumstances before taking any action.