Contract portability is often the single biggest legal bottleneck in a carve-out. Every agreement that underpins revenue, supply, IT, or real-estate must either move to the new entity, be renegotiated, or be left behind with the parent. A disciplined, early-start approach prevents last-minute consent crises and protects continuity of service.
Core Objectives
- Transfer or replicate all in-scope contracts without disrupting operations.
- Secure third-party consents before legal close.
- Renegotiate embedded terms (pricing, term, change-of-control clauses) when leverage is strongest.
- Minimize parent liability for post-close performance.
Contract Types to Address
- Customer sales and master service agreements
• Supply, manufacturing, and logistics contracts
• Software licences, cloud subscriptions, and data-hosting agreements
• Real-estate leases, sub-leases, and facilities services
• Financing, guarantee, and letter-of-credit documents
• Marketing, distribution, and agency agreements
• Confidentiality, IP licence, and joint-development contracts
Five-Step Assignment and Renegotiation Process
- Inventory and Categorize
– Extract a complete list from CLM systems, ERP, and shared drives.
– Flag each contract with expiry date, revenue or spend value, and governing law. - Analyse Consent Rights
– Review change-of-control, assignment, and novation clauses.
– Identify contracts that automatically terminate or trigger price resets. - Define Assignment Strategy
– Decide whether to assign, novate, replicate, or leave with parent.
– Prioritise high-value or mission-critical agreements for early outreach. - Engage Counterparties
– Draft consent-request letters that articulate the deal rationale and timing.
– Offer incentives where needed (extended term, volume commitments, minor price increases). - Execute and Track
– Use a central tracker showing status, responsible owner, and expected sign-off date.
– Escalate stalled consents to the Steering Committee within 48 hours.
Renegotiation Levers
- Align contract end dates with TSA sunsets to avoid dual obligations.
• Shift from parent-centric volume discounts to carve-out-appropriate tiers.
• Remove exclusivity or most-favoured-nation clauses that restrain future growth.
• Introduce termination-for-convenience rights to maintain flexibility.
Deliverables Checklist
- Master contract inventory with consent analysis and action plan
- Standard assignment, novation, and amendment templates approved by counsel
- Counterparty communication pack and outreach timeline
- Weekly status dashboard for PMO and Steering Committee
- Escalation log for high-risk or high-value agreements
Common Pitfalls
- Missing “silent” contracts embedded in local business units or shared drives
- Underestimating landlord timelines for lease assignments
- Assuming software licences are transferable without vendor approval
- Neglecting data-privacy addenda that must be updated post-transfer
A proactive, centrally managed contract-assignment program preserves revenue, safeguards supply, and keeps the carve-out on schedule.
