We rely on several critical vendor and software platform agreements to deliver our services. How do we audit and restructure these contracts on our exit runway so they do not trigger termination upon change of control?

Question

Tyler Smith · Accepted Answer

Many owners do not realize that their most valuable vendor and supplier contracts contain change of control clauses. These clauses state that if the ownership of your business changes, the contract is automatically terminated or must be renegotiated. If a buyer discovers that your critical relationships can disappear the day after closing, your deal is dead.

On your exit runway, you must systematically audit every vendor, supplier, and software agreement. Look specifically for transferability, assignability, and change of control terms. Your goal is to ensure that these contracts survive a transaction and transfer automatically to the new owner.

If you find restrictive clauses, do not panic. Use your regular contract renewal cycles to renegotiate these terms. Explain to your partners that you are cleaning up and modernizing your agreements for long term corporate planning. Request that the change of control or assignment language be amended to allow transfer to an affiliate or successor without prior written consent, as long as the new owner meets basic credit requirements.

By addressing these contract vulnerabilities early, you prevent last-minute renegotiations with hostile vendors during the high stress due diligence phase. Proactively securing these agreements proves to a buyer that your supply chain and operational tools are stable and fully transferable, protecting your purchase price.