We have a few historical wage-and-hour compliance gaps and unresolved contractor disputes that could derail a buyer's legal due diligence. How do we structure our weekly Thinking Time to clean up these liabilities before we go to market?

Question

Tyler Smith · Accepted Answer

Unresolved legal disputes, old wage-and-hour compliance gaps, and poorly documented contractor agreements are a buyer's dream during due diligence. They will use these unresolved liabilities to demand massive escrows, indemnity caps, or significant purchase price reductions. You cannot afford to ignore these issues, hoping a buyer will not notice. They always do.

You must use structured Thinking Time to proactively identify and neutralize these liabilities on your runway. Sit down with a blank notepad for forty-five minutes once a week. Ask yourself a high-value question: how might we uncover and resolve every compliance gap in our operations so a buyer's legal team has zero leverage to discount our price?

Make a list of every potential exposure point, including misclassified independent contractors, outdated employee handbooks, and unfiled sales taxes in remote states. Once identified, do not let these issues linger. Bring them to your leadership team's weekly Level 10 Meeting™. Create specific Rocks to systematically settle outstanding disputes, reclassify workers, and file voluntary disclosure agreements for back taxes. Resolving these liabilities on your own terms is far cheaper than paying the steep valuation discount a buyer will demand at the closing table.