Change-of-control clause

A change-of-control (CoC) clause entitles the counterparty to terminate or renegotiate an ongoing contract once control over the other party changes — for instance through a change of shareholders (share deal) or, depending on wording, through a going-concern sale involving a transfer of the business. Such clauses are common mainly in loan, licence, distribution and larger framework agreements, less so in simple supply or customer contracts.

In an asset deal out of insolvency, CoC clauses only bite if the relevant contract is transferred at all and the clause treats a business transfer under § 613a BGB as a control-relevant event — many clauses are ambiguously worded on this point, creating interpretation risk in a dispute. In a share deal, by contrast, the clause typically applies directly, since control over the contracting party itself changes.

For buyers, systematically screening all material contracts for CoC clauses is a standard part of legal due diligence — especially for targets whose value depends heavily on a handful of major customer, licence or financing contracts. If a critical clause surfaces only after signing, contract terminations can retroactively devalue the acquired business — obtaining the counterparty's consent early is often the only way out.