Category: Legal

Selling Your Business with a PPA in Place

Most PPAs include change-of-control and assignment clauses. What buyers will demand and how to structure the term sheet upfront.

Selling a business with a live PPA

Most UK commercial PPAs include change-of-control and assignment-on-sale clauses. These determine what happens when the off-taker (you) sells the building or the business — and they're often left to last-minute negotiation, which is expensive.

Three common pathways

1. Automatic transfer to buyer

Buyer inherits the PPA on substantially the same terms. Standard for arm's length sales to comparable covenant. Provider may require credit check on incoming buyer.

2. Provider consent required

Provider has approval right over buyer. Provider can demand new guarantees, fees or even tariff renegotiation if the buyer is weaker.

3. Buy-out on sale

Some PPAs trigger a fair-market-value buy-out on change of control — particularly if buyer is significantly weaker covenant. Costly but clean.

What buyers will check during DD

• PPA tariff vs current market — over-market PPAs hurt value
• Remaining contract term — long contracts limit buyer flexibility
• Escalator structure — high-escalator contracts are expensive future liabilities
• Assignment-on-sale clauses — restrictive clauses kill multiple bidders
• O&M obligations — weakly-drafted O&M can become a buyer headache

Negotiating upfront

Before signing the PPA, negotiate:

• Right to assign to any buyer of comparable size + covenant — no consent needed
• Pre-agreed buy-out formula if change-of-control triggers
• Cap on any "assignment fee" payable to provider
• 30-day notification protocol (not advance approval)