Asset versus stock changes which clauses fire. Selling with government contracts and selling an ITAR-registered company are the seller briefings. Backlog and contracts is the valuation essay. Surviving quality of earnings as a seller still tests whether "backlog" is firm.
Which clauses actually sit on the critical path?
Commercial OEM long-term agreements often forbid assignment without consent and treat a change of control as assignment. Blanket orders with cancel-for-convenience language are not the same as a take-or-pay. Distributor agreements can die on a name change. Tooling bailment agreements decide who owns the fixtures in the cage — which is also a peg issue.
Federal contracts sit under the anti-assignment statutes and FAR 42.12. The contracting officer must recognize the successor. Set-aside status is not a freely transferable asset. An asset sale can kill 8(a), SDVOSB, WOSB, or HUBZone overnight even if the work looks the same.
ITAR § 122.4(b) requires 60-day advance notice to DDTC when a transaction results in a foreign person owning or controlling a registrant (Source: DDTC). A CFIUS filing does not satisfy that notice. A domestic-to-domestic sale still needs registration amendments and a compliance program that survives close. "The buyer is U.S." is not "no DDTC work."
| Paper | What can fire | Typical next step | Who owns it |
|---|---|---|---|
| OEM LTA | Anti-assignment / change of control | Consent letter, sometimes a requalify | Commercial counsel + quality |
| Blanket / release | Cancel-for-convenience | Read the remaining firm releases | Same |
| Federal prime / sub | FAR 42.12 novation | Novation package, CO timeline | Gov-contracts counsel |
| Set-aside vehicle | Ownership tests | May die on an asset deal | Same |
| ITAR registrant | § 122.4(b) if foreign control | 60-day DDTC notice | Export counsel |
| Quality / portal | Registrar and customer portals | Name-change or re-audit | Quality + registrar |
| Lease / landlord | Assignment or COC | Landlord consent | Real-estate counsel |
BizBuySell's 223-day 2025 manufacturing median close (Source: BizBuySell) is a planning number, not a guarantee. Novation calendars can outlast a hope close. Put them on the Gantt the week the LOI is signed.
When should customers hear the news, and who should speak?
After staged disclosure allows names — usually after a signed LOI, not in a teaser, not on the first tour. The seller should make the first call on hero accounts, with a script, with the buyer present only when the process says so. A buyer who "just wants to say hello" before exclusivity is how rumors start and how competitors get a head start.
Selling with customer concentration explains why a 30% whale gets a special script. An earn-out can price a delayed consent. It cannot create one.
IBBA's 83% three-offer statistic on >$5 million files (Source: IBBA) is a process fact. It does not mean you can leave consents blank because another buyer will "figure it out."
How do SBA buyers and searchers underwrite a consent calendar?
SBA 7(a) still caps at $5 million with a 10% injection (Source: SBA). If the credit memo assumes the whale stays and the LTA forbids assignment, the loan is underwriting a hope. Individual buyers have less leverage with a contracting officer than a known strategic. Plan more calendar, not more slogans.
Search-fund files near Stanford's $16 million / ~6.2x / ~25% median (Source: Stanford GSB) will still hire gov-contracts counsel on a federal mix. That median is never a job-shop multiple. A 9% fabricator with one municipal blanket is a different consent file than an AS9100 shop with two primes.
Main Street manufacturing at 2.75x median SDE (Source: BizBuySell / Iconic) often has informal "contracts" that are really email releases. Those still need a call. Informal is not transferable by silence.
What should the LOI freeze so novation is not a December surprise?
Write whether the deal is assets or stock. Write that material contracts will be scheduled and that consents are a condition or a priced risk. Write that government and export-control work start on signing. Write that customer names stay in the room until the process releases them. Write a walk or earn-out path if a named consent fails.
Do not treat "customers love us" as a clause. Do not email the whale from a personal account the night you list. Do not let a competitor in the process see the contract file.
What does an illustrative consent file look like?
Illustrative only. A 40-person AS9100 shop, two primes, domestic buyer, asset deal: novation package starts at LOI, registrar notified on a scripted date, hero OEMs called after exclusivity, earn-out on one program if a release slips. Calendar measured in months. Ordinary for that mix.
A second file: 14-person job shop, no written LTAs, top customer 22% on email releases, asset deal: seller calls the buyer after LOI, no FAR work, no DDTC. Ordinary. Still do the call.
A third file: ITAR registrant, foreign-person buyer: 60-day DDTC notice under § 122.4(b), CFIUS analysis as its own track, FAR novation if federal work exists. Do not start that in week eleven of a 223-day planning calendar (Source: BizBuySell / DDTC).
Educational information only. Not legal advice. Government-contracts, export, and commercial counsel own the packages. Jason Taken is a business broker with HedgeStone Business Advisors. No consent is promised.
How should a seller inventory the paper before anyone goes to market?
Pull every LTA, blanket, quality agreement, tooling bailment, lease, and government vehicle. Highlight assignment and change-of-control sentences. Build a two-column list: "needs consent" and "entity continues if stock." That list decides wrapper more honestly than a tax slogan. Documents needed to sell is the tab list. This page is why those tabs exist.
If the hero OEM has a supplier-change process that takes 90 days, say so in the CIM process after NDA — not as a surprise in week nine. If a registrar needs a special audit on a name change, put that fee and that calendar in the model. Quality certificates are access products. They are not deeds.
Census CBP 2023 counted 284,452 manufacturing establishments, 68.4% under 20 employees (Source: Census CBP). Most small shops have email releases, not LTAs. Those still need a call. A missing written contract is not "simpler." It is a relationship that can leave without a clause to sue on.
What buyer mistakes burn a consent calendar?
Calling the whale before the seller. Asking for "a quick intro" on the first tour. Putting customer names in a teaser. Treating FAR 42.12 as a form you fill out after the appraisal. Treating DDTC notice as optional because CFIUS is "in process." Those mistakes leak the file or kill the close.
A useful diligence habit: map T12 and T36 revenue by account from the GL, then map which of those accounts have paper. Concentration without a contract map is a percentage, not a plan. QoE will reconstruct the percentage anyway.
Fed utilization 76.0% (Source: Fed G.17) does not assign a blanket. Combined 7(a)+504 can reach $10 million (Source: SBA); that capacity does not novate a prime. Jason Taken will keep customer names last and still put the contract schedule in the room early enough that counsel can start. HedgeStone will not let a CIM call backlog "sold" when the LTA forbids assignment. Write the path: consent, stock wrapper, earn-out, or walk. Then run that path. Do not invent a fifth path called hope.
CMMC and DFARS cybersecurity requirements on DoD contractors are versioned. Verify the current level required on the vehicles in the backlog. Do not hard-code a CMMC slogan on this page. A name change that drops a portal or a CAGE code is a consent-and-systems problem, not a logo problem. See the regulatory cluster for the cyber briefing.
Landlord and key-supplier consents belong on the same Gantt as customer letters. A resin compounder who must re-approve a new legal name can stop a line as thoroughly as an OEM. Tooling bailments decide whether customer-owned fixtures leave the cage — which the inventory count already has to tag.
Illustrative only, different from the files above: municipal water-authority blanket, no FAR novation, but a 60-day assignment clause and a performance bond that names the seller. Counsel rewrites the bond. The close waits. Ordinary, and still not a listing.
Deloitte/MI's 3.8 million / 1.9 million workforce figures (Source: Deloitte/MI) remind buyers that a consent letter does not staff the cell that will run the work. BLS machinist and welder medians ($58,750 / $53,750, Source: BLS) belong in the first-90-days budget beside the novation calendar. Employee transfer is that companion. Paper and people move together. If either side treats consents as a paralegal afterthought, the 223-day planning number (Source: BizBuySell) becomes a year. HedgeStone will put the contract schedule in week one of exclusivity. How it works keeps names last and still starts counsel on the clauses that do not need names to be read.
A last commercial habit: if the buyer is a strategic who already sells to the same OEM, antitrust and customer-conflict questions belong to counsel before anyone asks for a consent. Do not assume the whale will be glad to see a competitor's name on the packing list. Sometimes stock is easier. Sometimes the file should not be sold to that buyer at all. Name the path. Then take it.