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Change of control

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.

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