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this video will discuss contract consents in the context of an asset purchase transaction in a cash asset transaction the buyer purchases all or substantially all the assets belonging to the Target Corporation after the closing the buyer owns the purchased target assets and has taken over the assumed target liabilities the target uses the purchase price cash to pay off any remaining liabilities in the balance to cash out the target shareholders the target then dissolves in many cases the targets contracts are key assets in the targets business and a key reason for the buyers decision to acquire the target one example is a lucrative exclusive distribution contract for the target to resell the counterparties goods in the u.s. contracts however typically contain provisions that restrict their transfer the manufacturer in this example might only want to work with the target company and not the buyer which the manufacturer might consider to be a competitor thus the target might have negotiated a strong anti transfer provision to include in the distribution contract in many cases anti transfer provisions are not negotiated but rather included as boilerplate where that are not given a second thought until a proposed acquisition provisions that restrict transfer include anti-assignment provisions and change of control provisions a direct transfer of a contract that is of the entire bundle of all the rights in all the obligations is called an assignment of the contract this is what takes place in an asset purchase transaction if the specified contract is included in the assets to be purchased thus it is important to review each of the targets contracts to see if and how and under what conditions the target can transfer the contract to a buyer in an acquisition for example an anti assignment provision might allow an assignment but only with the counterparties consent if counterparty consent to the assignment is not obtained the counterparty might sue for breach of contract depending on the language of the anti-assignment provision the counterparty might even argue that the transfer is void another thing to keep in mind is that the buyer must conduct abroad due diligence for example the contract might allow assignment but this does the buyer little good if the counterparty can terminate the contract at will without paying a significant termination fee this is Jason Shay and thanks for tuning in