M&A Advisor Tip: Make contracts assignable

December 7, 2021/in Exit Planning, Sell a Business /by Al Statz

One key factor that significantly impacts the value of any contract is whether it’s assignable.

Don’t put yourself in a position of negotiating assignability at time of sale. It eliminates confidentiality and opens the door for customers to highjack your deal. Knowing your company is for sale—and that the sale is dependent on their contract—shrewd customers will ask for lower prices or more favorable terms, knowing you’ll likely agree to anything reasonable. You and your buyer both lose.

Not all industries lend themselves to contracts. Secure them if you can and work with your attorney so you can transition those agreements to a new owner…without asking customer permission first.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.