What is a change of control clause?
A change of control clause in a contract may give the party which is not subject to a change in ownership the right to terminate the contractual agreement in the event that the other party is subject to a change in ownership.
Why is a change of control clause important in a transaction context?
If your contracts with your customers or your suppliers contain a change of control clause, this could give those customers or suppliers the right to terminate their agreement with you if your company is acquired by another party. A prospective buyer will be certain to ask if such clauses exist in order to assess the riskiness of your customer and supplier relationships.