Can key developers just walk away with the codebase knowledge after a tech company is sold?

Legally, yes — nothing automatically stops a key developer from resigning after a sale closes, and the code itself (assuming ownership was properly assigned) stays with the company regardless of who leaves. The real risk isn't legal ownership of the code; it's the practical knowledge of how a complex, often under-documented system actually works, which can walk out the door with a departing developer far more easily than the code itself does.

This is why buyers of software and technology companies typically focus heavily on key-person retention as part of the deal, not just on IP ownership. Retention arrangements can include employment agreements with the incoming owner, transition or consulting periods for departing founders or lead developers, and financial incentives tied to staying through a defined post-closing period. Since general employee non-competes are largely unenforceable in Ontario outside narrow exceptions, retention through positive incentives — compensation, equity, meaningful roles — tends to matter more here than trying to lock someone in with restrictive covenants.

Identifying who actually holds critical undocumented knowledge during due diligence, and addressing retention for those specific people directly in the deal, is a more reliable protection than relying on the code being "owned" on paper.