A consent right that nearly cost a company its best new customer

The situation

'If I say yes to this customer and the deal falls apart in three weeks, am I the one who has to explain that to a hundred and forty employees?' That was the question Cristina put to us on a call, and it was not rhetorical. She wanted an actual answer, because the person asking her to sign was the seller, and the person she answered to was the employee ownership trust she served as trustee for, buying the company on behalf of its own workforce, most of whom she had never met in person.

The trust was acquiring a Waterloo manufacturer of precision components, a deal valued in the twenty-to-thirty-million range, structured so that the company's roughly one hundred and forty employees would become its owners through the trust rather than through individual share purchases spread across dozens of people. Cristina, a mortgage broker by background who had taken on the trustee role somewhat unexpectedly after the original candidate withdrew for health reasons, was managing the transaction almost entirely from a different province, having relocated for family reasons partway through the deal's early stages. Dante, a paramedic who sat as a second trustee, was local to Waterloo but had limited availability around shift work, which meant most substantive decisions ran through Cristina by phone and email, often at odd hours to accommodate the time difference between where she now lived and where the business actually operated.

The purchase agreement, as is standard in a deal with a gap between signing and closing, included interim operating covenants restricting what the seller, Khalil, could do with the business before the sale completed. One clause gave the buyer a consent right over any new customer contract above a modest dollar threshold, meant to stop the seller from taking on risky new obligations, or new debt-like commitments, that the trust would inherit on closing without having had any say in them at all.

Six weeks before the scheduled closing, Khalil was approached by a large original equipment manufacturer wanting to place a substantial, multi-year supply contract, the kind of customer relationship that could meaningfully change the company's future for the employees about to inherit it. It exceeded the consent threshold comfortably. Khalil needed an answer within days, and Cristina was three time zones away, mid-shift-change with her own new job, when the request landed in her inbox late on a Friday afternoon, easy to miss among everything else competing for her attention that week.

The complication

The consent mechanism itself was not unusual; interim operating covenants routinely require buyer sign-off on decisions above a certain size precisely because the buyer is about to inherit whatever the seller commits to. The complication was entirely about distance and timing, in ways the purchase agreement had not anticipated when it set a five-business-day response window for buyer consent requests.

Cristina, working remotely and juggling both the trustee role and her own full-time job, did not see the consent request until the following Monday, three of the five business days already elapsed before she had even opened the email. Dante, the second trustee, was on a stretch of night shifts and unreachable for the better part of that week. The trust's decision-making process, reasonable on paper for ordinary matters, had never been tested against a request this large arriving this fast, and there was genuine uncertainty about whether Cristina alone had authority to consent to something of this size or whether it needed a fuller trust decision involving input from employee representatives.

Khalil, meanwhile, was under real pressure from the prospective customer, whose own procurement process had a closing window of its own and was not going to wait on someone else's corporate governance. He called Cristina directly, then called us when she did not pick up quickly enough for his comfort, frustrated that a deal designed to protect the business seemed, in this moment, to be actively endangering the best opportunity it had seen in years.

The five-business-day window closed with no formal consent given, only a verbal, informal indication from Cristina that she was inclined to approve it but needed to confirm authority with the other trustee. Under the strict terms of the purchase agreement, Khalil was not permitted to sign the contract without written consent, and the customer, unaware of any of this, was left waiting for a signature that Khalil could not legally give.

By the time Cristina and Dante managed a proper call, four days after the window had technically closed, the customer's procurement lead had already flagged internally that the supplier looked disorganized, and had opened a parallel conversation with a competing manufacturer as a hedge, a detail Khalil only learned after the fact.

None of it was any single person's fault in the way a simple story would want it to be. Cristina had not ignored the request; she had a full-time job and a role she had not expected to hold, three time zones away from a business she had only ever seen through video calls and shared documents. Khalil had not mishandled the customer relationship; he had followed the agreement exactly as written, which was precisely the problem, because the agreement had never been tested against a request this time-sensitive when it was drafted months earlier under calmer conditions.

What we did

1. Got formal written consent from both trustees within twenty-four hours of being engaged on the problem. Once we were brought in, we treated getting Dante and Cristina on a joint call, even briefly around his shift schedule, as the immediate priority over any drafting, because nothing else could move until the trust actually had a documented decision rather than an informal indication.
2. Confirmed Cristina's authority to consent on the trust's behalf going forward. We reviewed the trust's governing documents and confirmed, in writing, that Cristina did have authority to provide consent under the purchase agreement without a full trustee vote for matters below a certain size, and recommended the trust formally minute that authority in its own records so the same ambiguity could not recur the next time a fast request arrived.
3. Delivered the consent to Khalil's counsel with a clear written record of timing. We sent the formal consent immediately once obtained, along with a short cover letter documenting when the original request had been received, when the five-day window had technically closed, and when consent was actually given, so the sequence sat on the record rather than left to memory. That record protected the trust's position in case the delay itself became a point of dispute later.
4. Contacted the customer's procurement team, through Khalil, to directly address the disorganization concern. Rather than let the delay speak for itself, we helped Khalil draft a direct, honest explanation to the customer describing the ownership transition underway and the governance step that had caused the short delay, which reframed the pause as a sign of careful ownership rather than operational weakness.
5. Renegotiated the contract's commercial terms once the customer indicated it would still proceed. The customer's parallel conversation with a competing supplier had given it leverage it did not have before the delay, and it used that leverage to push for modestly more favourable pricing and a shorter initial term than originally discussed, which Khalil, with our advice, accepted rather than risk losing the relationship entirely over a smaller commercial concession that would matter far less to him a year later than the customer relationship itself would.
6. Rewrote the consent mechanism in the purchase agreement for any further pre-closing decisions. We amended the interim operating covenants to set a shorter, clearer response window with an automatic escalation if either trustee did not respond within two business days, plus a standing designation of Cristina as the trust's primary point of contact for time-sensitive requests, to prevent a repeat of the same breakdown before the deal's remaining weeks to closing.
7. Documented the full episode for the trust's employee beneficiaries. Because the trust existed for the benefit of the company's employees, we helped Cristina prepare a plain-language summary of what had happened, why the delay occurred, and what had changed in the governance process, rather than letting the story reach the workforce secondhand through rumour once the acquisition closed. A corrected process explained openly does far less damage to trust than a hidden problem discovered later.

The outcome

The contract was signed roughly two and a half weeks after the customer's original approach, ten days later than the customer's initial informal target, on terms modestly less favourable to the manufacturer than the version first discussed. The pricing concession was in the low single-digit percentage range against the contract's overall value, and the initial term was shortened from what Khalil had originally proposed, though the volume commitments the customer made remained substantially unchanged from what had first attracted Khalil to the deal in the first place.

The relationship survived. That was not guaranteed at the point the five-business-day window closed with no answer, and Cristina, looking back on it, was direct about calling it a loss the trust absorbed rather than a story with a clean happy ending. The trust got the customer it wanted, but not on the terms it would have gotten without the delay, and that gap was a real cost, paid because a governance process built for ordinary decisions was not ready for one that arrived fast and large, at a moment when the person meant to answer it was harder to reach than anyone had planned for.

The acquisition itself closed on schedule roughly five weeks later, with the new customer contract as one of the assets the trust inherited, and with the amended consent mechanism already in place and tested once, informally, on two smaller requests that moved through the new two-day window without incident. Khalil, for his part, said the direct explanation to the customer's procurement team had mattered more than the amended contract terms, since it converted what could have become a lasting impression of disorganization into a one-time hiccup the customer stopped mentioning within a month.

Cristina said afterward that the episode taught the trust, earlier than it might otherwise have learned, that governing a company remotely required decision-making built for speed from day one, not adjusted only after the first time speed actually mattered and the cost of not having it became real and specific rather than theoretical.

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