Change-of-Control Clause Case: 2024-25 M&A Analysis

Change-of-control clauses in M&A are not memos tucked into a deal file.
They are provisions that can gut a closing or rewrite post-close revenue reality.
I’m reel when I say these provisions attach to contracts with customers, vendors, or partners and give those counterparties the right to terminate, renegotiate, or demand consent if ownership shifts by more than 50% or if all or substantially all assets move.
In practice, that means a deal can lose 20%, 30%, or more of its revenue base if key contracts flip sides at close.
Definition and triggers, plain and simple.
CoC (Change-of-control clause (advanced term)) clauses kick in when a stock transfer exceeds 50% of issued shares, or when there’s a sale of all or substantially all assets.
They can also show up through board-majority changes, mergers, or indirect ownership shifts.
Some setups try to dodge them with reverse mergers, but the risk is real, as the counterparty often challenges the structure.
No affirmative action from the counterparty is required for termination if consent is needed but not obtained; the clause effectively voids the contract post-close.
The risk spectrum here matters. You see objective triggers that spit out automatic termination, and you see veto or “sole discretion” clauses that let a counterparty walk if the change is deemed adverse.
The latter is where leverage concentrates, because they enable renegotiation or exit without needing a justification.
Then you have consent requirements that slow the process or force concessions before closing.
In middle-market M&A, where concentration can be high, CoC clauses are a real drag on deal speed and valuation.
If a target has three customers that account for 60% of revenue, CoC exposure isn’t theoretical.
From a buyer’s perspective, due diligence on CoC is non-negotiable.
You’ll face options: walk away after you’ve sunk time and money, accept risk and try to shield revenue through escrows, holdbacks, or indemnities (which lowers the deal’s value in DCF terms), or push to condition closing on consent from the counterparties.
The last option protects you but invites consent fees, price concessions, faster payment schedules, or even non-compete-like impacts on the seller’s economics.
A practical playbook I use: approach the target pre-disclosure to renegotiate commitments that avoid active execution of the CoC, or at least set a non-exercise path for certain relationships.
That can preserve revenue visibility while keeping the deal on track.
Look for loopholes that allow triggers despite anti-assignment language.
And push for strong reps and warranties that cover undisclosed CoC provisions, exclusivity, and IP impacts.
This isn’t theory; it’s about slicing risk into the right buckets and pricing it correctly.
Historical case study, real numbers.
Merck & Co.’s $41 billion deal to acquire Schering-Plough was announced Sep 2009 and closed Nov 2010.
The CoC clauses in Schering-Plough’s contracts with Johnson & Johnson around Remicade and Simponi were central.
Merck used a reverse-merger structure to keep the J&J agreements intact, hoping to dodge CoC triggers.
J&J argued the structure still caused an indirect ownership change, and litigation followed.
The dispute dragged on, and the parties settled with Merck retaining the drugs but paying costs and delays.
Those drugs were blockbuster, Remicade and Simponi each delivered over $1B in annual sales pre-deal.
The deal showed CoC clauses don’t just sit in a file; they drive strategy, structure, and potential post-close costs.
The lesson: don’t assume that clever structuring will bypass a CoC if the clause language is broad or has indirect triggers.
Due diligence must test triggers beyond the nominal deal structure.
A more recent real-world reference, New York tech acquisition completed in 2023 and analyzed in 2026.
That deal was lauded for a clean due diligence process and valuation, but three months after closing, vendor contracts’ CoC clauses activated.
Renegotiations followed, with price concessions and term refinements impacting post-close revenue recognition and customer relationships.
This isn’t an edge case; it’s a recurring pattern where robust upfront drafting and post-close engagement determine whether the run rate holds.
What this means for deal teams today.
CoC clauses come with three practical notes:
– Identify all potential triggers, including indirect ownership shifts, board actions, and asset sale structures. Don’t rely on headline thresholds alone.
– Map revenue concentration against each CoC clause. If you’ve got 60% revenue coming from three customers, you need robust mitigation and explicit deal protections.
– Build a risk allocation plan in reps and warrants, and align closing conditions with expected consent flows. If you can’t secure consent, your price, timing, and risk profile need to reflect that.
Recent research and commentary back this up.
Harvard Negotiation School’s guidance on change-of-control provisions highlights how clients use CoCs to exit or renegotiate terms, and JD Supra notes the broader complexity that CoC introduces beyond a simple buyer-seller dynamic.
PitCoff Law Group emphasizes that legacy agreements may be non-assignable, creating hidden liabilities at closing.
Litera covers the definition and typical triggers, while Freshfields’ 2026 MA predictions call out increasing regulatory scrutiny and deal structuring considerations that intersect with CoCs.
Aegis Law discusses reps and warranties in risk allocation, including CoC specifics, IP, and exclusivity, and Fynk clarifies that a CoC clause defines when ownership shifts occur.
Practical notes for 2026 deal teams.
Expect higher scrutiny of CoC during diligence, more requests for covenants that limit post-closing actions by the seller, and a growing use of escrow or holdback mechanics to bridge valuation gaps caused by CoC risk.
In regulated industries like financial services, CoC considerations may intersect with regulatory approvals, adding another layer of complexity.
Banks and insurers have seen CoCs influence closing certainty and remediation costs in deals where contract portfolios are concentrated with a few counterparties.
If you’re chasing a deal with meaningful CoC risk, you need a concrete plan.
Clarify triggers, quantify exposure, and build a realistic post-close revenue model that accounts for potential termination or renegotiation events.
Structure closing conditions to secure critical consents where possible, and negotiate for non-exercise commitments that preserve value for the seller while protecting the buyer’s economics.
Prepare for potential cost allocation and indemnity claims tied to undisclosed CoC risks.
Author perspective.
I’ve seen CoC clauses derail a closing or erode value in mid-sized deals where revenue concentration is high.
I’ve seen buyers lose confidence when a single vendor or customer controls a large share of the pipeline.
I’ve seen sellers negotiate hard to preserve relationships and price through consent regimes.
The data doesn’t lie: these clauses move leverage, and the best teams treat CoC as a core element of value, not a back-end risk.
Practical notes and call to action.
For readers of Matactic, keep CoC provisions at the center of due diligence, model the revenue impact with and without necessary consents, and prepare counterparty-specific negotiation templates that surface non-exercise commitments.
Learn more terms in our Matactic glossary and sign up for our free M&A course to deepen your understanding of change-of-control provisions and other critical deal terms.
For ongoing insights, I’m sharing practical templates and real-world examples, y’all won’t regret staying ahead on this.

Angie Reed