Glossary
Change of control
A change in the majority ownership or control of a company. Many contracts contain clauses that are triggered when it happens.
In plain English
A sale of the company is a change of control. Client contracts, supplier agreements, leases, financing arrangements and employment contracts may contain change-of-control provisions that give the other party the right to be told, to consent, to renegotiate or to terminate.
In an agency sale, change-of-control clauses in client contracts are the ones that matter most, because they can give a major client the right to walk away at the moment the buyer is relying on them to stay.
Why it matters
Buyers will review every material contract for change-of-control provisions during due diligence. Where consent is needed, obtaining it becomes a condition of the deal, and the timing of client conversations has to be planned carefully.
What to watch for
- Know which of your contracts contain change-of-control clauses before a process starts.
- Plan when and how key clients will be told about the transaction.
- Consents may be required before completion and can affect the timetable.
Transaction language and legal treatment depend on the agreement and the jurisdiction. Written by Motion Advisory Partners as general guidance, not legal advice.