Many of our multi-year customer contracts do not contain assignability clauses, meaning we might need client consent to transfer them to a buyer. How do we address this operational risk on our exit runway?

Question

Tyler Smith · Accepted Answer

Many owners discover too late in the exit process that their most valuable customer contracts contain anti-assignment clauses, which prevent the transfer of the contract to a buyer without the customer's written consent. This legal requirement gives your clients significant leverage, allowing them to demand price concessions or walk away entirely during a transaction, which can instantly derail your deal. To mitigate this risk, you must conduct a thorough contract audit at least eighteen months before going to market. Task your legal and operations leaders with reviewing every active client agreement to identify restrictions on assignment, change-of-control provisions, and termination-for-convenience clauses. Once you have mapped your contract landscape, use your weekly Level 10 Meetings™ to track a systematic update campaign. Do not alarm your clients by asking for sudden contract amendments out of nowhere. Instead, incorporate updated assignability language into your standard contract renewals, or bundle the amendment with a routine service expansion or price adjustment. For your largest accounts, plan a careful communication strategy to secure their consent smoothly when the transaction is announced. Addressing this legal issue early protects your recurring revenue streams and ensures a clean transition that buyers can trust.