Transferable Contracts: Ensuring Vendor Agreements Survive

Many vendor/supplier contracts include change-of-control provisions that terminate upon sale. Pre-identify these and renegotiate before listing.

Assignability Clauses: The Legal Nuance Buyers Care About

Contracts have 'assignability' clauses determining whether they transfer to new owner. Standard clause: 'This agreement is not assignable without written consent of other party.' Some contracts: 'Agreement terminates upon change of control.' If 30% of revenue depends on supplier contracts that terminate on change of control, buyer loses 30% revenue post-close. Audit requirement: Pull all significant contracts (top 20 vendors, customers, lease, licenses). Check assignability language. Identify termination triggers.

Auditing Your Key Vendor and Lease Agreements

Create matrix: Contract, counterparty, annual value, assignability status. For contracts with restrictive language, assess: Is counterparty cooperative? Will they consent to assignment? What concessions might they require? Landlord (if you lease facility) is criticallease must transfer or you lose location. Utilities, insurance, key vendor relationships: pull and audit.

How to Renegotiate Contracts for a Future Sale

Contact key counterparties before sale: 'We're planning strategic transition in 2 years. We want to ensure contracts remain in force under new ownership. Can we amend language to facilitate assignment?' Many say yes if you ask nicely. Some require fee. Cost: negotiating now might cost $5K-$50K. Benefit: no contract terminations post-close that destroy value. ROI: Usually positive.

Dealing with 'Change of Control' Provisions

Some contracts trigger renegotiation upon change of ownership. Buyer expects this and factors into price. Better to renegotiate pre-sale: 'New pricing structure proposed under new ownership would be X.' Then buyer knows exact costs post-close. Unexpected mid-negotiation renegotiation by counterparties kills buyer confidence.