Sellers assume the parties to a business sale are the buyer and the seller. In practice a bank, a landlord, a leasing company, a franchisor and two or three large customers may each hold something close to a veto — and the consents, not the drafting, are what set the completion date.
Two Different Problems, Depending on Structure
On an asset sale, contracts do not transfer automatically — each must be assigned or novated, and most either restrict assignment or require consent. In practice a deal concentrates on the material ones: key customer contracts, principal supplier arrangements, the lease, finance and leasing agreements, licences and permits, and anything the business cannot operate without. On a share sale that problem largely disappears, because the contracting company never changes — and is replaced by a subtler one. A change-of-control clause entitles a counterparty to terminate, renegotiate or demand repayment precisely because ownership or control has changed, which is the one thing a share sale definitively does. Those clauses sit in banking facilities, equipment leasing and hire purchase, franchise agreements, software and technology licences, distribution and agency agreements, and increasingly in ordinary customer contracts — particularly with larger customers and public bodies. The trap is that everyone assumes a share sale avoids consents, so nobody reads for them.
Finding Them, and Deciding When to Ask
You find them by reading the contracts — which is exactly the exercise most owner-managed businesses have never done. That is why it sits on the readiness list: a seller who has assembled the material contracts and identified what each says about assignment and change of control can plan the deal, while a seller who has not meets the same information in due diligence, presented by the buyer’s solicitor at a moment when it looks like a problem rather than a plan. When to approach counterparties is a genuine judgement, not a rule. Approaching customers, landlords and lenders discloses that the business is for sale — commercially sensitive, and capable of unsettling relationships if the deal then collapses. Leaving it late makes consents the critical path and moves the completion date. The usual compromise: identify every required consent at the outset, prepare the approaches, and make them once the deal is advanced enough to justify the disclosure risk, typically after due diligence is substantially complete but well before signing. And if a key customer refuses, the buyer is not acquiring what they thought — the response is a condition, a price adjustment, or a retention released if the contract survives a period after completion. What is not a response is discovering the question at completion.
Do You Know Who Can Block Your Sale?
Bank, landlord, lessors, franchisor, key customers. Identifying every required consent at the outset is what keeps a completion date realistic - and it is a reading exercise, not an expensive one.
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