We want to ensure our legal entities and historical corporate records are completely clean before we begin a transaction. What specific corporate governance tasks must we tackle on our exit runway?

Question

Tyler Smith · Accepted Answer

Sloppy corporate governance is one of the most common reasons deals fall apart or get delayed during legal due diligence. Buyers and their legal teams will scrutinize your historical corporate records, entity structures, and shareholder agreements to ensure there are no hidden liabilities or ownership disputes. To prevent these issues from stalling your transaction, you must aggressively clean up your legal records on your exit runway. Start by auditing your corporate minutes, board resolutions, and operating agreements to ensure they are complete, signed, and up to date. If you have ever issued stock options, phantom equity, or warrants to employees, ensure these are fully documented and legally compliant. Next, review all existing contracts with customers, vendors, and landlords to ensure they contain clear assignability clauses. This allows the contracts to transfer seamlessly to a buyer without requiring renegotiation. Work with your corporate attorney to resolve any lingering disputes, intellectual property ambiguities, or outdated shareholder agreements. By organizing all legal and corporate governance documents into a secure virtual data room, you prove to prospective buyers that your business is professionally managed and ready for a clean, low-risk transition.