Quick take
A contract can look fine until control changes and the clause becomes a live deal issue.
Glossary term
Change-of-Control Clause
A change-of-control clause is contract language that gives a counterparty rights, restrictions, or termination remedies if ownership or control of the company changes. In M&A, these clauses are reviewed to determine whether consents, pricing changes, or termination risk could impair the value of a key contract after closing.
Why it matters
Change-of-control clauses can block transfer, force consent requests, or reduce the value of customer and supplier relationships when deal certainty matters most.
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Reviewed by Sorai’s diligence research and workflow design team.
Financial, tax, legal, and transaction process terminology for investor-facing diligence workflows.
Key points
- Can require counterparty consent before a contract transfers after an acquisition.
- May give the counterparty termination or repricing rights.
- Often appears in customer, supplier, lease, and licensing agreements.
- Is one of the highest-priority clause families in legal diligence.
- Needs source-level evidence because wording differences change the risk outcome.
Related terms
Related resources
Frequently asked questions
What is a change-of-control clause?
It is contract language that gives a counterparty rights or remedies if the company changes ownership or control.
Why do change-of-control clauses matter in M&A?
Because they can require consent, allow termination, or change commercial terms after the acquisition.
Where are change-of-control clauses usually found?
They are commonly found in customer contracts, supplier agreements, leases, licenses, and executive arrangements.