Change-of-control in Vendor Contracts

When you buy a business, you inherit its contracts. You also inherit every clause buried in those contracts that lets the counterparty walk because of the sale. Sub-$5M services deal last quarter. Buyer was acquiring a commercial cleaning company. Top customer was 22% of revenue on a three-year master services agreement with two years left. Page 14 of the MSA had a change-of-control clause. Standard language: any sale, merger, or transfer of more than 50% of the equity gave the customer the right to terminate on 30 days written notice, no cause required. The customer wasn't unhappy. They'd renewed the contract twice. Nobody had any reason to think they'd leave. But the moment the buyer closed, that customer had unilateral optionality to walk for 30 days and the seller had no obligation to disclose to the customer that a sale was even happening. The fix wasn't legal. It was commercial. Buyer arranged a meeting with the customer before close, walked through the transition plan, secured a written waiver of the termination right in exchange for a one-year price lock. The deal closed. The customer stayed. Change-of-control language exists in most vendor and customer contracts. Almost nobody pulls them in diligence. The ones who do close deals nobody else can.