We rely on several key supplier agreements and vendor contracts that contain change of control clauses. How do we manage these relationships on our exit runway to ensure a buyer can seamlessly take them over?

Question

Tyler Smith · Accepted Answer

Your core business operations likely rely on key supplier and vendor relationships. If these agreements contain change of control clauses, the contracts could terminate or require renegotiation upon a sale. This creates a massive operational risk that a buyer will notice immediately during due diligence.

You must audit all critical supplier and vendor contracts at least two years before your target exit date. Identify which agreements require consent from the other party to transfer ownership. If a key supplier has the right to walk away or rewrite the pricing terms upon a change of control, you must address this early.

Begin conversations with these critical partners to secure amendments or assignability clauses that permit a transfer to a qualified buyer. If you have strong, long-term relationships, this is usually straightforward.

If a supplier is uncooperative, you must build redundancy into your supply chain. Use your quarterly Rocks to identify and onboard alternative vendors. Proving to a buyer that you have qualified back-up suppliers who can step in immediately mitigates key-contract risk and protects your valuation. Ensuring your operational workflows are fully documented on your exit runway guarantees that any switch in vendors can be executed seamlessly.