We are approaching our two year exit runway and need to renegotiate several major customer and supplier contracts. How do we structure these agreements so they are highly attractive to a buyer without raising red flags that we are preparing to sell?

Question

Tyler Smith · Accepted Answer

Negotiating major contracts on your exit runway requires balancing long term stability with operational flexibility. Buyers want to see secure, recurring revenue and stable input costs, but they also dread being trapped in rigid agreements that prevent integration.

To make these contracts attractive to a buyer, ensure they contain clear, assignable change of control clauses. This allows the agreements to transfer automatically to the buyer at closing without requiring the other party's consent, avoiding a common transaction bottleneck.

Additionally, avoid agreeing to long term exclusivity clauses or volume commitments that could limit a buyer's ability to consolidate suppliers or restructure the product line. Keep your contract terms standard and clean, avoiding custom, non-standard pricing concessions that artificially inflate your revenue at the expense of your margins.

Use your weekly Level 10 Meetings to review these contract negotiations and align them with your V/TO targets, ensuring every major agreement signed during your runway directly enhances your enterprise value and simplifies due diligence.