Assignment-consent requirements can cause serious problems in future M&A transactions

A lot of contracts provide that Party A must obtain the prior written consent of Party B if it wishes to assign the agreement to a third party.

This can cause serious problems for Party A down the road if it wants to assign the agreement in connection with a corporate change of control or other M&A deal: Party B might try to ‘extract’ a big payment or other concession in return for giving its consent.

I’ve just posted an extended discussion of such provisions and some of their various permutations and combinations. The discussion includes a recap of the 2006 Dubai port deal, in which an assigning party was forced to come up with millions of dollars to buy the other side’s consent.