Should I sign long-term customer contracts before selling?

A longer contract can genuinely help a sale, but only if it is written in a way that survives the change of ownership. A contract that locks in revenue on paper but cannot transfer to a buyer solves nothing and can create a new problem instead.

Why buyers like locked-in revenue

A customer contract with a defined term reduces the uncertainty a buyer is pricing when they value the business, especially compared to relationships that could end with little notice. Several material customers under multi-year agreements can meaningfully support a stronger asking price, provided the buyer can actually count on that revenue continuing after closing.

Check the assignment clause before you sign

Many commercial contracts include a clause restricting assignment without the other party’s consent, sometimes called an anti-assignment clause, which means the contract does not automatically transfer to a buyer just because the business changes hands. If a new contract you are signing to help the sale contains this kind of restriction and the customer is unlikely to consent later, it may do less for your value than it appears to.

Consider the buyer’s side of a long term too

A long contract term can also work against you if it locks in pricing or terms a buyer thinks are unfavourable, or if it includes obligations the buyer will find hard to fulfil, such as service levels that depend heavily on you personally. Read a contract you are about to sign from a future buyer’s perspective, not only from the perspective of what looks good on a summary of revenue today.

Do not sign purely for appearances

A contract signed only to make the business look better for a sale, without regard for whether it makes sense on its own terms, can become a liability if the sale takes longer than expected or falls through. Any contract you sign should make sense for the business to be operating under whether or not the sale ultimately closes.