Change of Control
Also called: Change of Control Clause · CoC Clause
A change of control clause governs what happens to a contract when one party is acquired or its ownership materially changes. It typically gives the other party a right to consent, renegotiate, or terminate — protecting them from being locked into a deal with a new, unchosen owner.
In more detail
The underlying concern is that a contract is entered into with a specific counterparty. If that counterparty is bought by a competitor, or by a business with a very different risk profile, the commercial bargain may no longer be the one that was agreed.
These clauses matter disproportionately during M&A diligence. A target company with change-of-control termination rights scattered through its customer contracts may find that an acquisition triggers a wave of exit rights, which directly affects valuation.
Definition scope is the practical question: whether "control" means a majority shareholding, a change in board composition, or any transfer above a threshold — and whether intra-group reorganisations are carved out, as they usually should be.
What our lawyers check
- How "control" is defined, and whether the threshold is realistic
- Whether the trigger gives consent, renegotiation, or outright termination rights
- Whether internal group restructurings are carved out
- Whether the right is mutual or available only to the counterparty
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms