Reviewing a change of control clause

A change of control clause lets a party terminate, or requires its consent, if the ownership of the other party changes. It comes into play when the business is sold, takes investment or reorganises, at which point every customer with the clause may have a right to leave and a buyer's due diligence will look for it. The definition of control decides how many transactions trigger it; the consequences decide what the trigger costs. I review the clause from whichever side instructs me and return it marked up with a written explanation of what triggers it, what it does to a transaction, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales whose contracts contain change of control clauses and that are planning a sale, an investment round, a management buy-out or a group reorganisation, and customers and licensors wanting the right to reconsider a relationship if their supplier or licensee is acquired. Both parties are businesses.

What to look for in a change of control clause

How control is defined and how many transactions it catches

The clause will define control by reference to shareholding, voting rights, the right to appoint directors, or the test in section 1124 of the Corporation Tax Act 2010 or the parent and subsidiary definitions in section 1159 or section 1162 of the Companies Act 2006. The review checks whether the definition catches a minority investment, a founder reducing below a majority, a change in the ultimate parent, an intra-group reorganisation, a listing, or a change in the trustees of a family trust, and narrows it to the transactions the other party has a legitimate interest in knowing about.

What a change triggers: termination, consent or notice

The consequence may be termination without further act, a right for the other party to terminate within a period, a requirement for prior consent, or an obligation to notify. The review asks for notification rather than consent, for a termination right exercisable only within a short window after notice, for consent not to be unreasonably withheld where it is required, and for the right to fall away if not exercised, so that a buyer of the business knows on completion which contracts it keeps.

The competitor carve-out and the interest the clause protects

The legitimate reason for the clause is that a customer does not want its supplier acquired by a competitor, or a licensor does not want its licensee owned by someone it would not have chosen. The review drafts the clause to that interest: a right to terminate where the acquirer is a competitor of the other party or a person with whom it has a stated reason not to deal, and no right where the acquirer is a financial investor, a group company or a buyer that gives the same covenants.

The effect on a sale, an investment round or a reorganisation

For a business planning a transaction, the review lists the contracts with the clause, identifies which will be triggered by the structure proposed, and advises on the sequence: obtaining consents before exchange where the contracts are material, notifying after completion where notification suffices, and restructuring the transaction to stay below the definition where that is possible. It also checks the confidentiality clause, since notifying a counterparty of a proposed sale may breach it, and the assignment clause, which a sale of assets rather than shares would engage instead.

Drafting for the side you are on

For a business that may be sold, the review drafts notification rather than consent, a competitor-only termination right with a short window, and carve-outs for group reorganisations, listings and investment. For a customer or licensor wanting protection, it drafts a definition that catches indirect changes at the parent level, a right to terminate on notice within a stated period, and an obligation on the other party to give early notice, with the customer's accrued rights surviving and interest running on sums due under the Late Payment of Commercial Debts (Interest) Act 1998. Where a termination fee is attached to the trigger, it must reflect the innocent party's legitimate interest under the rule in Cavendish Square Holding BV v Makdessi [2015] UKSC 67.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

We are taking investment for a minority stake. Does that trigger our customers' change of control clauses?

That depends on each clause's definition of control, and some catch any change in the shareholding above a percentage or any new director appointment right. The review reads the definitions in your contracts against the structure and identifies which are triggered and which are not.

A customer wants the right to terminate if we are acquired. Should we agree?

You can, if the right is limited to acquisition by a competitor of the customer, exercisable within a short window after notice, and carved out for investors, group reorganisations and listings. The review drafts that version, which customers accept.

Do we have to tell our counterparties before we sell?

Only where the clause requires prior consent or notice, and telling them may breach a confidentiality clause. The review sequences the consents and notifications with the transaction timetable and identifies the contracts where consent must be obtained before exchange.

Related guidance and services

• Contract review, £495, the service this page describes
• Shareholders agreement, £995
• Reviewing an assignment and subcontracting clause
• Reviewing heads of terms before a deal

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.