An asset sale requires the transfer of all our customer contracts to the buyer, but if our contracts contain strict consent-to-assignment clauses, our deal can be held hostage. How do we resolve these assignability bottlenecks before going to market?

Question

Tyler Smith · Accepted Answer

An asset sale requires the transfer of all your customer contracts to the buyer, but if our contracts contain strict consent-to-assignment clauses, your deal can be held hostage by your clients. This gives them the leverage to renegotiate terms or walk away entirely, which can derail the transaction at the eleventh hour.

To eliminate this risk, you must audit your customer contracts long before you sign a Letter of Intent. Identify every contract that requires written consent for assignment or change of control.

Use your quarterly EOS Rocks to systematically renegotiate these agreements. Your sales team can use routine contract renewals or service updates as an opportunity to insert standard transferability language.

By updating these clauses to allow assignment without consent in the event of a merger or sale, you remove a major diligence bottleneck.

This proactive legal housekeeping protects your deal structure and ensures the transaction can close smoothly without giving your customers unilateral veto power over your exit. Presenting clean, easily assignable contracts to a buyer demonstrates a highly professionalized operation and justifies a premium valuation.