Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Assignment

Definition

The transfer of rights from one person or entity (the assignor) to another (the assignee).

Example

Under a lease assignment, the lease is assigned from the seller (assignor) to the purchaser (assignee). The seller often remains liable when assigning a lease for the premises to the buyer. An assumption, on the other hand, releases the assignor from liability.

Tips

Many contracts are signed when selling a business, but some contracts contain a “no assignment” or “anti-assignment” clause, which prohibits the assignment of a contract. Many transactions are structured as a stock sale to facilitate the assignment of critical contracts to get around a “no assignment” provision. However, some contracts also include a “change of control” provision, prohibiting an assignment even if the sale is structured as a stock sale. With the exception of personal service contracts, most contracts are assignable or transferable unless the contract specifically prohibits assignment. Note that the assignor often remains liable during the remainder of the term. Most landlords require the seller to stay on the lease as a guarantor when a lease is transferred from seller to buyer.