A change of control is an event (defined in a contract, plan, or law) where control of a company shifts to a new person or group.
Common triggers include:
- Acquisition of the company (merger or sale of substantially all assets)
- Someone or a group obtaining majority voting power (often >50%, sometimes a lower threshold is specified)
- A majority change in the board of directors over a set period
- Certain reorganizations that result in new controlling owners
Because the exact meaning is contract-specific, documents often spell out the precise thresholds and exceptions.
Typically, the sale of the startup’s securities for the purposes of raising additional funds does not constitute a “Change in Control.”
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