Our largest customer represents thirty percent of our revenue, and their contract requires their explicit consent to transfer ownership of our company. How do we structure the deal and our transition plan to prevent this consent requirement from stalling our sale or giving the buyer an excuse to drop their valuation?

Question

Tyler Smith · Accepted Answer

A contract that requires third party consent is a major operational risk that buyers will exploit to demand an aggressive deal structure or a lower valuation multiple. To defuse this threat, you must approach the transition with a clear operational plan. First, evaluate whether a stock sale rather than an asset sale bypasses the consent requirement, as many contracts only restrict the assignment of the contract itself, not a change of control of the parent company. If consent is unavoidable, you must structure a transition period in the purchase agreement where you keep the relationship secure. Create a specific transition Rock for your leadership team to handle the customer communication. Do not approach the customer until the deal is fully negotiated and ready to sign. When you do, bring your Integrator and the successor leader who will run the account post sale to prove the relationship is institutionalized. Show the customer that the operating systems and Level 10 Meeting™ structures they rely on will remain identical. By demonstrating a seamless transition plan, you reassure both the customer and the buyer, keeping your deal structure intact.