Vendor contracts

A favourable supply arrangement — good pricing, priority allocation during shortages, extended payment terms — is often worth real money, but only if it is actually transferable. A buyer who assumes it comes with the business, without reading the contract, can find out after closing that the terms reset, or the supplier simply declines to continue.

What to check in each contract

• Whether it contains an anti-assignment clause, and whether it requires consent, notice, or is silent
• Whether a change-of-control triggers automatic termination, even without an outright assignment
• The remaining term, renewal terms, and any minimum purchase commitments that carry forward
• Whether pricing or terms are tied to the current owner personally rather than the business

How this gets handled in the deal

A share sale generally keeps vendor contracts in force, since the corporation that signed them still exists — subject to any change-of-control clause. An asset sale usually requires each contract to be assigned individually, which is exactly why the contract list gets reviewed line by line before the structure of the deal is finalized.