We have dozens of long-term customer contracts that we want to transfer to a buyer, but many contain change-of-control clauses. How do we audit and prepare these customer relationships on our exit runway to prevent customers from using our sale as an excuse to renegotiate terms?

Question

Tyler Smith · Accepted Answer

Customer contracts with change-of-control or assignment clauses can cause major delays or even sink a transaction during due diligence. If a buyer discovers that your most valuable customers can legally terminate their agreements upon a change of ownership, they will discount your valuation or demand a high earn-out to cover the risk.

To mitigate this on your exit runway, you must conduct a thorough contract audit. Identify all active agreements containing restrictive transfer clauses. As you renew these agreements or sign new clients, systematically negotiate the removal of change-of-control restrictions, or replace them with standard clauses that allow transfer to any affiliate or successor entity.

Equally important is transferring the actual customer relationship away from yourself. Use your exit runway to transition key client touchpoints to the appropriate seats on your Accountability Chart. Ensure that your account managers are the ones leading client strategy and handling renewals. When a buyer sees that your contracts are legally transferable and your client relationships are managed entirely by your team, they will view your revenue streams as highly secure and valuable.