Are Contracts Assigned in a Merger

When companies merge, there are a lot of moving parts to consider. One question that often arises is what happens to existing contracts. Are they assigned to the new merged entity? The answer is: it depends.

In many cases, contracts will include provisions outlining what happens in the event of a merger or acquisition. Typically, these provisions will require either the consent of the counterparty or provide for automatic assignment upon the merger. In some cases, the contract may prohibit assignment altogether.

If a contract does not have any specific provisions addressing mergers or acquisitions, the default rule is that a contract is not assignable without the consent of the counterparty. This means that the new merged entity would need to obtain the consent of each party to the contract in order to assume the rights and obligations of the original contracting parties.

Assuming that all parties agree to the assignment of the contract, the new merged entity would become the successor in interest to the original parties. This means that the new entity would assume all of the rights and obligations of the original parties, including any payment obligations, performance obligations, and liability for breach of the contract.

While it is important to consider the assignment of contracts during a merger, it is equally important to consider the other implications of the merger on the contracts. For example, a merger may trigger an event of default or termination of the contract, require consent or notice from the counterparty, or result in a change of control provision.

As a professional, it is important to remember that when writing about mergers and contracts, it is essential to use relevant and high-volume keywords such as "mergers and acquisitions," "contract assignment," "successor in interest," and other related terms. Additionally, it is important to consider the target audience for the article, ensuring that the language is clear and concise for both legal and non-legal readers. By doing so, the article will have a higher chance of being found by the intended audience and read by those who seek to understand the complexities of mergers and acquisitions.