Consent Before Completion: A Contract Transfer Checklist for UK Business Buyers

Most acquisitions are negotiated as a financial event and experienced as an administrative one. The completion statement balances, the bank transfer clears, and the buyer settles into the unfamiliar position of owning a business whose paperwork still belongs to somebody else. Customer master agreements, software licences, the premises lease and the trade insurance may all continue to name the seller for weeks afterwards. None of this appears in the completion accounts, but all of it determines whether the acquired business can trade on the Monday morning after.

The remedy is not heroic legal drafting. It is sequencing: identify the contracts that matter, understand what each one requires before it can move, and start the slowest consents first. The checklist below is intended for owner-managers and finance leads on the buy side, working alongside counsel, rather than as a substitute for it.

Two Deal Structures, Two Very Different Problems

Before any contract is examined, confirm what is actually being bought. In a share purchase, the target company remains the same legal entity; its contracts continue with the company and generally require no novation at all. The risk there sits in change-of-control clauses, which may hand counterparties a consent right or a termination right even though the contracting party has not changed. In an asset or business transfer, the contracts sit with the seller and must be transferred. That usually means novation rather than assignment.

The distinction matters because buyers frequently arrive at completion having prepared for the wrong one. A share buyer who has commissioned a novation schedule has spent money on a problem it does not have, while an asset buyer who has relied on a general "transfer of rights" clause may find that only the benefit has moved.

Assignment Is Not Novation

Assignment transfers the benefit of a contract — the right to be paid, typically — but not its burden. The buyer receives the income and none of the obligations, which is rarely what either party wants and is usually prohibited outright by the contract's anti-assignment wording.

Novation is a three-party arrangement: the seller is released, the buyer steps in, and the counterparty agrees to look to the buyer alone. Because it extinguishes the original agreement and replaces it, most solicitors will document it by deed, and many counterparties will insist on their own template. Practically, this means three signatures rather than two, and a process that runs on the counterparty's timetable rather than the deal team's. Build that expectation into the completion plan rather than discovering it afterwards.

Read for Change of Control First

A short, targeted review of the top twenty contracts by value will usually surface the constraints that matter. Look for:

• Change-of-control provisions granting consent, termination or price-review rights on a shift in ownership.
• Anti-assignment and anti-novation clauses, including those requiring consent "not to be unreasonably withheld" — a phrase that sounds generous and litigates badly.
• Termination triggers tied to insolvency, creditworthiness or a change in the identity of the controlling shareholder.
• Personal guarantees and parent company guarantees given by the seller, which will not survive the transfer unless expressly replaced.
• Exclusivity, minimum-volume and most-favoured-customer terms that may bind the buyer in ways the seller never mentioned.
• Step-in rights held by large customers or funders over subcontractors and key personnel.

Record each finding against the counterparty, the clause reference and the consent required. This register, not the sale and purchase agreement, is the document the integration team will work from.

Rank by Consequence, Not by Expiry Date

A contract register sorted by renewal date tells you nothing about risk. Sort instead into three tiers.

Tier one comprises agreements whose loss would materially affect revenue or the ability to trade: the largest customer contracts, any framework agreement with a public body, the sole-source supply arrangement, the premises lease, and the regulatory permissions without which the business cannot operate. Nothing in this tier should be left outstanding at completion without a documented fallback.

Tier two covers operational dependencies that can be bridged for a quarter but not for a year: logistics, hosted software, payment processing, utilities, trade insurance and banking facilities.

Tier three is everything else — low-value, readily replaceable, and sensibly dealt with through a ninety-day post-completion programme rather than allowed to delay the deal.

The Consents That Take the Longest

Landlord consent is the usual culprit. Commercial leases commonly require the landlord's approval for transfer, and landlords are entitled to ask for a rent deposit, a guarantor or an authorised guarantee agreement. Twenty working days is optimistic; six weeks is not unusual, and the request often needs a business plan and references attached.

Regulated sectors move more slowly still. Change-in-control notifications to a regulator, franchise approvals, export or waste licences and lender consents all carry their own lead times. Software vendors are a quieter problem: many licences are personal to the licensee, priced by entity size, and technically require a new order form on any transfer.

Where a consent cannot be obtained before completion, the deal need not stall. Consider a retention or escrow of part of the consideration, an express warranty and indemnity, a short-term agency arrangement under which the seller invoices on the buyer's behalf, or an agreed power of attorney. What should not happen is an undocumented assumption that consent will arrive eventually.

Employment and Data Sit Outside the Register

On a relevant transfer, employees transfer automatically by operation of law, and the associated liabilities travel with them; on a share purchase, they simply remain. Either way, the buyer inherits consultation obligations, pension arrangements and any live tribunal exposure.

Under UK data protection law, the buyer must also update its records of processing, confirm the lawful basis for inherited customer data, and settle controller and processor terms with suppliers. Marketing consents do not improve on transfer, and inherited lists should be treated with caution until the position is checked.

The Completion Gate

At signing, ask for a short, verifiable pack: the contract register with consent status against each entry; evidence of consents already obtained; a schedule of outstanding items with a named owner and a dated target on each; agreed novation templates; confirmation that insurers, bankers and the pension provider have been notified; and a joint customer communication drafted but not yet issued.

Then diarise the ninety-day review. Novation is not the goal — the goal is a business that can invoice, supply and be supplied without asking the seller's permission. Until every tier-one contract carries the buyer's name, the acquisition is complete on paper only.