Several of our key customer contracts have strict change of control clauses that require prior consent before a sale. How do we handle this on our exit runway without tipping off our customers and risking our relationships?

Question

Tyler Smith · Accepted Answer

Managing change of control provisions requires a delicate balance of timing, legal strategy, and relationship management. If you approach key customers too early, you risk destabilizing your revenue. If you wait until the last minute, a single stubborn customer can hold your entire transaction hostage.

To navigate this on your exit runway, conduct a thorough audit of all your contracts. Have your legal counsel review every customer agreement to identify which accounts require explicit consent, which only require notification, and which are completely transferable.

Next, evaluate the strength of your relationship with each key customer. Your management superstructure should already have deep, multi-layered relationships with these accounts, ensuring that their loyalty is to the business and its systems, not just to you personally.

As you enter the final stages of a transaction, prioritize the order of your outreach. You do not need to notify everyone at once. Typically, you will wait until you have a signed Letter of Intent and are in the final due diligence phase before initiating these conversations.

Frame the transition as an upgrade for the customer. Explain how the buyer's resources, technology, or scale will directly benefit their business. By delivering a clear, professional narrative backed by a strong leadership team, you can secure their consents quickly and close the deal without disrupting your customer relationships.