BigCo 2

Last week we looked at a situation where BigCo wants to impose its new MSA, and that MSA has a 30-day notice period compared to the 6 months you had previously.

It turns out the new MSA also has a change of control clause. If there is a change of control of your company (ie. if you sell your company), BigCo can terminate immediately.

That’s a problem for you because, at some point, you will want to sell your company. And contracts which give customers an easy exit are going to reduce the price you get.

When you ask BigCo why it needs this right, it answers: because it can't afford to be doing business with suppliers that are controlled by Russian oligarchs or other people with dodgy reputations.

What are your options?

1.   You can say No, and point out that BigCo already has a right to terminate for convenience, so they don't need a right to terminate for change of control.

2.   You can say Yes, but trade it for something that you value more.

3.   You can say Yes, but restrict the right to the specific scenarios they have raised. For example, the purchase of a controlling interest by Russian oligarchs or by people on the UK or the USA sanctions list. The chances of a buyer falling in this list are so small that it’s not worth worrying about.

4.   You can say Yes, but restrict it by making the right exercisable only within 60 days of the change of control. If BigCo doesn’t exercise the right within that time, it lapses.

Again, one of the critical issues is whether change of control is on BigCo’s must-have tick box list. If it is, then option 3, ideally combined with option 4, is going to be the best choice for you.

29 April 2025