How to review a change of control clause

A change of control clause decides what happens to a contract when one party is sold or merges. Buyers check these clauses in due diligence because they can let the other side terminate or renegotiate a key contract just as a deal closes. This guide covers how these clauses work, a checklist of points to check and how to review one in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

How change of control clauses work

• Assignment is not the same thing. An anti-assignment clause restricts a party from transferring the contract. A sale of that party's shares or a merger often leaves the contracting entity in place, so whether it counts as an assignment depends on the wording and the governing law. A change of control clause deals with the sale directly. See our assignment clause guide.
• Mergers. Courts have reached different results on whether a merger is a transfer "by operation of law". If you want rights on a merger, say so expressly rather than relying on the assignment clause.
• Consents are separate from regulatory approvals. A contract consent is a private right of the counterparty. It sits alongside, not instead of, any merger control or other regulatory approval the deal needs.

Clause checklist

• Definition of control. Ownership of more than 50% of the voting securities, the power to appoint a majority of the board, control by contract, or a lower percentage? Check whether indirect changes higher up the ownership chain count.
• Triggers. A share sale, merger, consolidation, sale of all or substantially all assets, or a change in management. Check that an asset sale is covered, since it usually needs an assignment of the contract.
• Consequence. Prior consent, notice only, a right for the other side to terminate, a right to renegotiate prices, or acceleration of payments. Notice plus a termination right is a common middle ground.
• Consent standard. If consent is needed, can it be withheld for any reason, or not unreasonably withheld, conditioned or delayed?
• Competitor buyers. A customer may want a termination right only if the buyer is a named competitor or a competitor in a defined market.
• Carve-outs. Internal reorganizations, transfers to affiliates, a public offering and ordinary trading in listed shares are often excluded.
• Timing. How long after the change the other side has to exercise a termination right, and how much notice it must give. An open-ended right leaves the contract uncertain.
• Effects. Fees owed on early termination, transition assistance, return of data and which clauses survive. See our termination clause guide.
• Mutuality. Does the clause bind both parties or only one? A supplier's change of control can matter to a customer as much as the reverse.
• Interaction with other clauses. Check the assignment clause, the confidentiality clause (the buyer may be a competitor) and any exclusivity or non-compete that would bind the buyer's group.

A change of control clause review workflow in Word

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the agreement never leaves the tool you already draft in.

1. Open the agreement in Word and open LexDraft in the side panel.
2. Pick the governing law. Select the state named in the governing law clause so LexDraft looks for state-specific red flags.
3. Run the review. Run the review on the whole agreement. For NDAs, SaaS MSAs, DPAs and services agreements, run the matching playbook on the whole agreement; for other contracts LexDraft runs a general AI review against the governing law you chose. LexDraft has no separate clause-only playbook.
4. Triage by severity. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
5. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI.
6. Accept or reject each redline. Accepted changes land as native Word tracked changes.
7. Verify and sign off. You check every output before it goes to the client or the other side.

Common mistakes

• An assignment clause that bans transfers "by operation of law" while the parties assume that covers a share sale.
• A definition of control with no percentage, so nobody can tell whether a minority investment triggers it.
• A termination right with no deadline, so the counterparty can wait and use it as leverage years later.

What LexDraft does not do

LexDraft does not give legal advice, run due diligence on a deal or tell you whether a particular transaction triggers a clause. Nothing changes in your document until you accept a redline.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.