What Happens to Your Contracts When Your Business Is Sold or Restructured
Contracts are not automatically transferable.
They must permit assignment.
Assignment Restrictions
Many agreements restrict assignment without consent.
This means that a sale or restructuring may require approval from counterparties.
Change of Control
Some contracts treat a change in ownership as a deemed assignment.
Even if the contracting entity remains the same, the agreement may be triggered.
Practical Impact
This becomes critical in transactions.
Key contracts may need to be renegotiated or consented to before closing.
Delays and uncertainty often arise at this stage.
The Practical Takeaway
Contracts do not move with the business unless they are structured to do so.
Assignment and change-of-control provisions determine whether they can follow the transaction.