We helped our client with the purchase of various reseller telecoms contracts. This involved the transfer of hundreds of contracts which had to be done rapidly and with minimum disruption to the business of our client, the reseller and the reseller’s customers.
Context and Challenge
Our client is a business within the telecommunications sector offering hardware and software solutions through a cloud-based platform. One of their resellers was willing to transfer all of its customer contracts over to our client. There were hundreds of contracts to be transferred. Our client wanted the transfer to happen rapidly with minimum disruption to the business operations of the end user customers and of course to their own business and the business of the reseller. We had to come up with a solution that wasn’t just legally workable but which worked commercially and was as simple to implement as possible. Although our client was supplying the underlying service to the customers, that service was white-labelled so the customers had to be handled with care.
Process and Insight
We checked the reseller’s contracts with its customers to see what restrictions were in place around transferring the contracts. We then looked at the best way of transferring the customer contracts over to our client.
Finally we drafted a contract for our client and the reseller to enter into agreeing to the customer contracts transfer.
The transfer agreement was very much a bespoke contract involving earn out provisions on top of upfront payments. The earn out provisions protected our client in case customers were lost following the transfer process.
We felt that the best way to transfer the customer contracts was by novating them. Once our client and the reseller had signed off the transfer agreement we helped draft simple novation notices to the customers making it as simple as possible for them to agree to their contracts being novated.
The transfer contract was finalised and the novation process completed on time and within budget. The earn out provisions in the transfer agreement were all satisfied within 12 months and both our client and the reseller were happy with the outcome. Our client’s business grew as a result of this transaction. The reseller approached us 2 years later to help them on a separate deal.