Glossary
Change of control
Short answer
A change of control clause gives a party rights, typically to consent, renegotiate or terminate, if ownership or control of the other party changes, for example through a share sale, merger or acquisition. The clause defines what counts as control, and a trigger may require notice within a fixed period.
By Pactinel editorial teamReviewed on October 22, 2026
Change of control clauses protect a party against finding itself bound to an unknown new owner, such as a competitor of the customer.
Typical elements
- Definition of control: often more than 50% of voting shares, or the power to direct management.
- Trigger events: share sale, merger, sale of substantially all assets, or a shift among major holders.
- Consequence: consent required, notice, right to terminate, or acceleration of payments.
- Timing: notice before or within a number of days after the event, and a window to exercise termination rights.
Example clause
"If a party undergoes a change of control, it must notify the other party within 30 days. The other party may terminate this Agreement by written notice given within 90 days after receiving that notification."
Why it matters in due diligence
In a merger or acquisition, a buyer must review every material contract for these clauses, since a deal may trigger them without any contract being formally assigned. The risk is largest for contracts with key customers and strategic suppliers.
A share sale does not move a contract to a new party, so it may avoid an assignment clause, but not a change of control clause. See termination for cause.
This is general information, not legal advice.