Change-of-control clauses in a business acquisition: contracts that require consent and how buyers secure risks before signing and closing.
BRANDAUER Rechtsanwälte
Salzburg law firm for corporate, company and transaction law
Every transaction is handled by a coordinated team of lawyers, legal staff and specialists. In company acquisition matters we look at structure, contract, tax and liability together.
Many acquisitions do not stumble over the purchase agreement itself but over existing customer, supplier, lease, licence or financing contracts. If these contracts contain a change-of-control clause, the ownership change may trigger a consent requirement, a termination right or a renegotiation right.
This post explains how to identify change-of-control risks in Austria early and how to secure them in the purchase agreement. The key points are a clean contract due diligence, a realistic consent plan and a clear rule for the case where a consent is not available before closing.
The review belongs in the same workstream as the general due diligence. Whoever reads change-of-control clauses only shortly before closing loses negotiating room and risks a gap between the purchase price and the business that can actually be carried on.
Answer two questions on key contracts and consents. You receive an initial assessment of whether the topic should merely be documented or actively solved.
Already know you want to get in touch? Go straight to the enquiry form.
Customer, supplier, lease, licence and financing contracts with an express change-of-control rule are particularly relevant.
If only secondary contracts are affected, clear documentation in the due diligence report is often enough. Still record which contracts were reviewed and why no consent is needed. This avoids later disputes about overlooked contract risks.
A short follow-up review of the main revenue, lease and financing contracts remains useful.
If responsibility and consequences are clear, the risk can be managed. Consent to individual key contracts is often included as a condition to completion. Less critical contracts can be covered by warranty, indemnity or purchase price mechanics. The right contract logic is closely linked to the closing conditions.
The buyer should not pay the full purchase price although key contracts may fall away after closing.
If consents are missing for economically important contracts, this should not be treated as a side issue. Check whether consent can be obtained before signing or whether it belongs into the purchase agreement as a condition to completion. A holdback, indemnity or termination right can also be considered.
Especially with major customers or financing contracts, the firm should read the specific clause before closing.
Change-of-control clauses often appear in long-term customer contracts, framework supply agreements, lease and tenancy agreements, licence agreements, bank contracts and public funding contracts. The clause does not always refer only to a formal share deal. Some contracts also capture mergers, reorganisations or a change of beneficial ownership.
In an asset deal the additional question is whether the contract can be transferred at all. Section 38 UGB assists with the transfer of business-related legal relationships but it does not replace every contractually agreed consent situation. The contract review must therefore distinguish between share deal and asset deal. More detail is available on the focus page on share deal and asset deal.
The buyer wants to ensure that the economic basis of the business remains intact after closing. The seller wants to avoid a closing failure due to a consent that a third party delays for tactical reasons. Both interests can be reconciled only if the agreement distinguishes between key contracts and less important contracts.
For key contracts a true condition to completion may be appropriate. Without consent there is no closing. For less central contracts, cooperation duties, information rights and an indemnity for specific losses are often sufficient. The purchase price can also be protected through a holdback or later adjustment.
These points show whether a clause merely needs documentation or affects completion of the transaction.
| Point | Meaning | Contract solution |
|---|---|---|
| Key contract Key contract | Revenue, site or financing depends on it | Condition to completion or specific indemnity |
| Secondary contract Secondary contract | Low economic relevance | Documentation and cooperation duty |
| Unclear clause Unclear clause | Interpretation or scope is open | Legal review before signing |
| Consent reachable Consent reachable | Third party is cooperative | Set timeline and responsibility |
| Consent uncertain Consent uncertain | Third party may delay | Review holdback, termination or fallback |
Caution with key contracts: If a major customer, landlord or financier can terminate because of the change of control, a general warranty is not always enough. Review the specific clause before signing and set out in the purchase agreement which consent must be available by closing. Booking an initial consultation (72 euro) can quickly bring clarity.
Start with a list of all contracts that support revenue, site, financing, IT, licence rights or regulatory permits. Mark every clause that refers to ownership change, control change, assignment, reorganisation or beneficial ownership. Then assess whether consent is realistic before signing, between signing and closing or only after closing.
The finding does not belong only in the data room. It must be translated into the purchase agreement as condition to completion, seller covenant, warranty, indemnity or purchase price adjustment. Our M&A deal risk profile shows how risks become visible in a structured way.
No. What matters is whether the clause actually captures the specific ownership change and which consequence it triggers. Some clauses require only information, others consent or allow termination.
Not always. For key contracts, consent before closing is often decisive. For less important contracts a cooperation duty with indemnity may be enough.
The purchase agreement must then provide the consequence. Options include termination, holdback, purchase price adjustment, indemnity or an obligation to find a fallback solution.
When buying a company, structure, review and contract decide. Call us directly or send an email, callback within one business day.
Address
BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg
Phone
+43 662 6280000