Many of our critical software licenses and vendor agreements have change-of-control clauses that require consent. How do we audit and restructure these third-party vendor contracts on our exit runway so they do not block a smooth transaction?

Question

Tyler Smith · Accepted Answer

Many business owners overlook their third-party contracts until they are deep in due diligence, only to find that key software, supplier, or lease agreements have restrictive change-of-control clauses. These clauses can give vendors leverage to renegotiate terms or block the sale entirely. To prevent this, you must systematically audit all major contracts on your exit runway. Look at your software licenses, equipment leases, real estate leases, and key supplier agreements. Identify any language that requires vendor consent for a transfer of ownership. Your goal on the runway is to renegotiate these agreements to ensure they are fully assignable to a buyer without penalty or renegotiation. If a vendor is critical to your daily operations, having an unassignable contract is a major red flag for a buyer's legal team. By proactively securing assignable contracts, you remove a major obstacle to closing and demonstrate to buyers that your operational foundation is completely secure and ready for a seamless transition.