Glossary · Deal documents
Change of control clause
Also called change of control, change of control clauses
Definition
A change of control clause gives a customer, supplier, lender or landlord the right to end or renegotiate a contract when the company changes owner. Finding these clauses in the key contracts is one of the main jobs of legal due diligence, because they can put revenue at risk once the deal closes.
Where change of control clause comes up
On this site, in our guides and in the conversations we've written up.
Video · RSM South Africa What operational due diligence checks that financial and legal DD miss Legal due diligence starts with the shape of the deal, a sale of business or a sale of shares, then moves to commercial contracts with change of control clauses, regulatory compliance and tax risk. 
Video · The Motley Fool Datasite's CEO on what deal data shows and where AI agents fit in M&A Sell-side teams can use agents to find diligence hotspots, such as change of control provisions in HR contracts, before a sophisticated buyer finds them. Related terms
Legal due diligence The lawyers' review of a company: ownership, key contracts, disputes, licences, employment terms and intellectual property. Share purchase agreement The contract by which a buyer acquires the shares of a company, with the price, warranties and conditions. Asset purchase agreement The contract for buying selected assets and liabilities of a business, instead of its shares. Confidential information memorandum The detailed sales document a seller's adviser sends to buyers after they sign an NDA. Disclosure letter The seller's list of known exceptions to its warranties, which limits what the buyer can later claim for. Indemnity A promise to repay a specific loss in full, often used for known risks found in due diligence. Letter of intent A mostly non-binding document that sets out the main terms of a deal before the final contract is negotiated. Material adverse change A clause that lets a buyer walk away if something seriously damages the business between signing and closing.