Blog: VLP Speaks

Preparing Your Business for Sale: Five Issues Buyers Look for During Due Diligence – A Blog Post by David Goldenberg

Posted on Jul 21, 2026 in Blog by David Goldenberg

Most successful business sales aren’t won at the negotiating table—they’re won long before the letter of intent is signed. Here are five legal issues sophisticated buyers routinely examine during due diligence and why addressing them early can preserve value and keep a transaction moving. 

Most owners spend years building value in their businesses. Revenue grows, customers become more loyal, operations improve, and management teams mature. Then, when the decision is made to sell, many are surprised to discover that the transaction slows—not because of the business itself, but because of issues uncovered during due diligence.

Sophisticated buyers expect to find some imperfections. What concerns them is uncertainty. Every unresolved legal issue becomes another question to answer, another risk to evaluate, or another point of negotiation.

The good news is that most diligence issues are both predictable and preventable.

Here are five areas that deserve attention well before a business goes to market.

1. Ownership of Intellectual Property

For many companies, intellectual property is among their most valuable assets. Buyers will want confidence that the company actually owns what it is selling.

Questions often arise when software, technology, designs, marketing materials, or other key assets were created by founders, contractors, consultants, or early employees without clear assignment agreements. Resolving ownership issues before a transaction begins is almost always easier than trying to do so under the pressure of a closing timeline.

2. The Cap Table and Corporate Records

A buyer needs to know exactly who owns the company and who must approve the transaction.

Inaccurate capitalization tables, undocumented option grants, missing board approvals, or incomplete corporate records can create unnecessary delays. These issues are often the product of lack of oversight or poor records rather than intentional mistakes, but they become highly visible during diligence.

A well-maintained cap table and organized corporate records give buyers confidence and help keep negotiations focused on the business instead of its paperwork.

3. Customer and Commercial Contracts

Many businesses derive a significant portion of their value from a relatively small number of customer relationships.

Buyers will review key contracts to understand renewal terms, termination rights, exclusivity provisions, assignment restrictions, and change-of-control clauses. Discovering that an important contract cannot be assigned without consent—or may terminate upon a sale—can materially affect transaction planning.

Understanding these issues in advance gives owners options rather than surprises.  Consider a review of these agreements now, and potentially negotiating for renewal and transfer rights.

4. Employment and Incentive Arrangements

Key employees often represent as much value as the company’s products or services.

During diligence, buyers look closely at employment agreements, confidentiality and invention assignment agreements, equity incentive plans, and retention arrangements. Missing documentation or inconsistent practices can raise questions about employee stability and ownership of important work product.

Addressing these matters before a sale helps demonstrate that the business is built on a solid foundation.

5. Unresolved Legal and Governance Issues

Pending disputes, informal side agreements, outdated governing documents, or governance practices that no longer reflect how the company actually operates can all complicate a transaction.

These issues do not necessarily prevent a sale, but they frequently consume management time during diligence and create opportunities for buyers to seek additional protections or adjustments.

The earlier they are identified, the more flexibility owners have in deciding how to address them.

The Bottom Line

Successful transactions are rarely the result of a last-minute legal sprint. They are the product of years of thoughtful preparation.

Owners who periodically review their legal housekeeping are often able to move through diligence more efficiently, reduce distractions during a sale process, and negotiate from a position of greater confidence.

Whether a transaction is six months away or several years into the future, taking the time to address these issues before buyers begin asking questions is an investment in preserving the value you’ve worked so hard to build.​​