We have dozens of active customer and vendor contracts, but we have never paid attention to the legal boilerplate regarding assignability or change of control. How do we audit and update our legal agreements on our exit runway to prevent customers from using our acquisition as an opportunity to renegotiate or walk away?

Question

Tyler Smith · Accepted Answer

Many business owners overlook the legal boilerplate in their contracts until they are deep in due diligence, only to find that their most valuable customer agreements cannot be transferred to a new owner without written consent. This legal hurdle can grind a transaction to a halt, giving key clients leverage to renegotiate their terms or walk away entirely, which instantly kills your deal value.

On your exit runway, you must conduct a thorough audit of all active customer and vendor agreements. Identify any clauses related to assignability, change of control, or termination upon transfer. Your goal is to ensure that your contracts can be seamlessly transferred to a buyer without requiring the other party's permission.

If you discover restrictive clauses, start updating your contract templates for all new business and renewals immediately. Work with your legal counsel to insert standard transferability language that allows the contract to remain in force after an acquisition. For legacy contracts with key accounts, strategically approach those clients to update the terms during routine contract renewals. Addressing these legal details early ensures that your revenue remains locked in, giving buyers the peace of mind they need to close the deal without delay.