Value is lost in diligence, and most of the losses are avoidable with preparation.
Corporate records. A complete and consistent ownership record, signed governing documents, minutes for material actions, and evidence of authority for past transactions. Gaps produce holdbacks.
Contracts. Signed originals located, assignment and change of control provisions reviewed, and consents identified. A key customer contract requiring consent to assignment is leverage transferred to the customer at the worst moment.
Employment. Classification of contractors and exempt employees reviewed; wage practices audited; restrictive covenants in place with key personnel and enforceable under the applicable state’s law; and equity awards documented with board approvals.
Intellectual property. Assignments from every employee and contractor who created anything; registrations current; open source usage inventoried.
Financial. Clean, consistently prepared statements, ideally reviewed or audited for the periods a buyer will examine; revenue recognition consistent; related-party transactions identified and normalised.
Litigation and claims. Resolved or reserved, with the file organised.
Real property and permits. Leases with estoppels obtainable, permits current and transferable.
Data and privacy. A data inventory, a privacy notice matching practice, and a security programme that can be described.