Legal
Opening your books in order to sell
The price is agreed on a figure and adjusted by whatever surfaces. Everything you do not find, the buyer will.
You have agreed a price and from there a review begins: contracts, employment, licences, property, litigation, insurance. **You do not run that review and you do not control it**, and its outcome is not an academic report — it translates into price reductions, into warranties you must give, or, if something large enough surfaces, into the deal collapsing.
What is actually being measured
| What they find | How it reads | Effect |
|---|---|---|
| Everything in order | A well-run company | Confidence, and fewer questions |
| One document missing | An oversight | It is requested and things move on |
| Many missing | **You do not know what you hold** | **Everything gets scrutinised** |
| **Something you concealed** | **A trust problem** | **Collapse or full renegotiation** |
Important
**What costs most in a review is not what is wrong: it is what cannot be found.** A contract with an awkward clause gets valued and discounted once. A contract nobody can locate forces the worst possible assumption about its contents, and that worst case gets discounted too. Same company, two different prices, and the difference is the archive.
What to do before opening the door
- 1
Review it yourselves first, using the buyer's list
The lists are fairly standard. Ask for it or anticipate it.
- 2
Find the gaps and close what can be closed
An unsigned contract can be signed; in three months, it cannot.
- 3
And whatever cannot, declare it first
What you disclose gets valued; what they find gets penalised.
- 4
Prepare how it is handed over
Organised, controlling who sees what, with a trail of what was shared.
Watch out
The asymmetry in this position is total and worth keeping in mind: **for the buyer this is a process they have run twenty times, and for you it is the first and probably only one**. They have lists, templates and dedicated people; you have to keep trading while you answer. Starting to tidy up when the first request arrives is starting late — and that asymmetry costs real money, not pride.
Worth knowing
What exactly is reviewed in a transaction, what representations and warranties are signed and what consequences they carry **depends on the deal and the contract, and is settled by your adviser and your lawyer**. Here we cover the organisational part: how to arrive with the archive in shape and how to hand it over without losing control of what is shared.
›When should I start tidying up?
Before there is a buyer. It is the only moment when it costs nothing.
›Can I withhold something?
Your lawyer decides that, and the consequences of concealment are not documentary.
›Is a shared folder enough?
To start. What is also needed is knowing who has seen what.
A real case
The situation
The buyer sends a long list and it has to be hunted across many places.
What you do
- Gathers the company's documentation in one file
What you get
You answer in blocks rather than by discovery.
The situation
A contract turns up that nobody can locate.
What you do
- Shows what is missing before the review opens
What you get
The gap closes while it still can.
The situation
A folder is shared and nobody knows who has seen what.
What you do
- Controls access and leaves a trail of what was viewed
What you get
The handover is orderly and verifiable.
The situation
Each department sends theirs in a different format.
What you do
- Centralises what is handed over in one place
What you get
The buyer receives a coherent set.
The situation
A key document sits in the mailbox of someone who has left.
What you do
- Keeps documents outside personal inboxes
What you get
One person leaving does not take the archive.
The situation
The review drags on and nobody knows what is outstanding.
What you do
- Shows the status of what was requested and delivered
What you get
The process runs on a list rather than on emails.
This article answers
- preparing for due diligence
- documentation requested when selling a company
- tidying up records before a sale
- the buyer finds things we did not know about