Three Sisters, One Company, and a Wall of Supplier Consents

The situation

Halima and Sarah both worked full-time as court clerks, careers that had nothing to do with the industrial coatings company their parents had spent three decades building in Orillia. Along with their sister Emily, the three had inherited equal shares in the business several years earlier and, after a run of strong seasons, had accepted an offer from a larger industrial group looking to expand its coatings and finishing capacity across Central Ontario. The agreed price sat in the mid-twenty-million-dollar range, structured as a purchase of all the issued shares of the company rather than a purchase of its individual assets.

None of the three sisters had run the company day to day — a long-serving general manager handled operations — and none had been through a business sale before. They came to Treadstone Law after signing a letter of intent, wanting a team to carry the legal side of the transaction through to closing while they kept their own jobs and let the general manager keep the plant running.

Their father had built the company's customer base slowly, one industrial account at a time, long before any of the three sisters were involved. Many of the supply and customer agreements he had signed were decades old, drafted by whoever the company's lawyer happened to be at the time, with boilerplate terms nobody had revisited since. That history mattered more than the sisters realized once the sale process began, because those older agreements were exactly where the riskiest clauses tended to sit.

What due diligence found

In a share purchase, the target company itself does not change — the same corporate entity keeps operating, just with new owners. Because of that, sellers and their advisors sometimes assume existing contracts simply carry over untouched. That assumption is only partly true. Many commercial contracts contain a change-of-control clause: a provision giving the other party the right to terminate, renegotiate, or demand written consent if a specified percentage of a company's shares changes hands. The clause exists so that a supplier or customer who agreed to deal with one ownership group is not forced to keep dealing with a stranger it never chose.

Due diligence on the company's contract file turned up twelve agreements with change-of-control language of some form — two long-term supply contracts for raw coating materials, a facility lease with an option period, an equipment financing agreement, and seven customer supply agreements, several of which accounted for a meaningful share of the company's annual revenue. Under most of these clauses, closing the share sale without notifying the counterparty and obtaining written consent would give that counterparty the right to terminate on short notice — regardless of how well the business was run afterward, and regardless of how long the relationship had lasted under the sisters' parents.

The buyer's lawyers had already flagged this in their own review and, as is standard practice, made receipt of signed consents from the company's largest counterparties a closing condition: a requirement that had to be satisfied before the buyer was obligated to complete the purchase. That is a common and reasonable position for a buyer to take. A buyer paying tens of millions of dollars for a business is, in large part, paying for its relationships — its supply chain and its customer contracts — and wants assurance those relationships will still be intact the day after closing, not a promise that they probably will be.

Left unresolved, missing consents would not just create risk after closing — they could let the buyer walk away from the deal entirely under the terms of the purchase agreement, or use the gap in the final weeks to press for a lower price on the theory that the business being delivered was worth less than the one originally valued. For three sisters who had never negotiated a transaction of this size before, that kind of last-minute leverage was exactly the scenario to avoid.

What we did

1. Triaged the contract list by real exposure, not by clause wording. Not every change-of-control clause carries equal weight. We ranked all twelve agreements by revenue or operating impact and identified the five — the two material supply contracts and three of the largest customer agreements — where losing the relationship would materially affect the value the buyer was paying for. Those became the priority.
2. Drafted the consent requests before the sisters made a single call. Each request explained, in plain terms, that ownership of the shares was changing but the company, its staff, and its day-to-day operations were not. We kept the requests short and factual, avoiding language that would invite the counterparty to treat the request as an opening to renegotiate pricing or terms.
3. Coordinated timing with the buyer's counsel. Approaching suppliers and customers too early, before the sale was reasonably certain to close, risked unsettling relationships over a deal that might not happen. Approaching too late risked missing the closing deadline. We agreed a sequence with the buyer's lawyers so outreach began once financing and other major conditions were substantially satisfied.
4. Managed the one counterparty who pushed back. One raw material supplier used the consent request as leverage to seek improved pricing terms as a condition of signing. We separated the consent itself — the acknowledgment that the contract would continue — from the commercial renegotiation, so the supplier's pricing request could be handled as ordinary business discussion between the general manager and the supplier, without holding the closing condition hostage to it.
5. Tracked every outstanding signature against the closing timetable. With twelve moving pieces and a fixed closing date, we kept a running schedule shared with the buyer's counsel showing exactly which consents were signed, which were in progress, and which carried the highest risk of delay, so nobody was surprised in the final week.

The outcome

All five priority consents were signed roughly three weeks before the scheduled closing date, with the remaining seven lower-risk consents following shortly after. The supplier who had tried to use the request as leverage ultimately signed the consent on the original commercial terms, with the pricing discussion continuing separately as an ordinary business matter unconnected to the sale. No counterparty exercised a termination right, and none of the company's customer or supplier relationships were disrupted by the change in ownership.

The deal closed on schedule at the full agreed price, with no reduction sought by the buyer and no last-minute extension needed. Halima, Sarah and Emily received their proceeds according to their equal shareholdings, and the general manager stayed on to run the business under its new owner, with staff and operations continuing without interruption.

For the buyer, the completed consent file also became part of the closing record — proof that the revenue base it was paying for was contractually secure, not just operationally intact on paper. For the three sisters, the consent process was the least visible part of the transaction from the outside — no counterparty ever knew how close the deal timeline had come to hinging on their signature — and, because it was handled weeks ahead of the deadline rather than in a scramble at the end, it stayed that way. None of the sisters had to take time away from their own jobs to manage it directly; the general manager and our team handled the outreach, and the sisters were kept informed through short updates rather than being pulled into every negotiation.

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