Glossary · People and paperwork
Contract
In short
A legally binding agreement between two or more parties, outlining their rights and obligations. In an acquisition, you'll review all significant contracts to understand ongoing commitments and revenue streams.
What it means in a deal
During due diligence, scrutinize customer contracts, vendor agreements, leases, and employment contracts. Pay attention to terms like renewal, termination clauses, and change of control provisions. Ensure contracts are assignable to you, or that new ones can be easily established post-closing.
Related terms
Common questions about Contract
- How does a lender determine affiliation when a prior owner retains less than 20% equity and a consulting contract?
- What specific conditions trigger affiliation due to contractual relationships or franchise agreements?
- When does a prior contractual relationship create affiliation for 7(a) size determination?
- When does a contractual relationship between two businesses trigger affiliation for size standard calculations?
- Can I use an SBA 7(a) loan to acquire a business that relies heavily on independent contractors instead of employees?
- What if the business I'm acquiring relies heavily on government contracts for revenue?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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