Change of control provision

Definition

A clause letting the other party act when ownership changes.

Why It Matters

It can quietly undo the value you are buying, because a top customer or a franchisor able to walk at the sale turns a signed revenue stream into a permission you still have to win. Find these clauses early by reading the contracts behind the largest revenue lines rather than sampling, and treat each one as either a consent to obtain before closing or a number to discount. The dangerous version is the clause requiring consent that nobody thought to ask for, since it can be enforced long after the deal closes.

In numbers: A franchise agreement's change-of-control clause means a $1.2M resale needs the franchisor's approval before closing; miss it and the brand rights you priced do not transfer with the assets.