Exit-Ready Governance
What Acquirers Look For - and Lawyers like
Most founders believe that exit preparation begins when the offer arrives - at least that’s been my experience. In reality, potential acquirers and their lawyers will start judging a company years earlier - often long before you know they’re watching. The difference between a successful exit and a costly one (with a painful discount on the price) often comes down to one thing: governance discipline.
When a company finally closes a sale after weeks of work, it’s often tempting to think that the final sprint sealed the deal. In reality, the outcome of exits is frequently determined years earlier, in the steady discipline of corporate governance. It’s a test of a company’s maturity.
A clean, accurate capitalisation table is one of the first things that lawyers and bankers will scrutinise. They expect up-to-date records showing all shares, options, warrants, and convertibles, each properly authorised (by board resolution) and properly documented. Any ambiguities in ownership or equity history can easily derail negotiations or lead to costly escrow holdbacks. Likewise, board minutes are combed for proof that key actions, such as equity issuances, financings, and acquisitions, were duly approved. Lawyers want to see a company board exercising its so-called “fiduciary duties” without exposing the company to unnecessary litigation risk.
Contracts are another proving ground. Acquirers will review a company’s obligations to uncover possible hidden landmines, such as change-of-control clauses, non-assignable agreements, licensed intellectual property, or uncapped indemnities. Every forgotten provision that surfaces during diligence can become leverage to reduce the price paid or change the terms of an agreement. Compliance gaps are equally dangerous; a fast-growing company can easily outpace its registrations, adherence to employment law, or industry-specific licensing. The best time to address these gaps is before anyone is paid to find them.
For many tech start-ups, intellectual property is the asset, making airtight ownership critical. Buyers will expect documented assignment agreements from every founder, employee, and contractor, along with a clear chain of “title” (i.e. ownership), free from third-party claims. Any weakness in IP documentation can chill interest or slash valuation.
Finally, governance maturity signals that a company can scale without disruption. Indeed, an early-stage business doesn’t need a public-company governance model. However, having independent directors, board committees, and documented oversight shows institutional quality. The discipline of regular audits - of governance, contracts, compliance, and IP - prevents last-minute scrambles when an offer arrives.
Founders sometimes believe they can “clean it up later,” but time pressure during a deal can easily shift leverage to the buyer. Those companies that sail through diligence are those that have quietly been exit-ready all along. Good governance isn’t just legal hygiene; it’s a growth strategy that builds trust with investors, customers, and employees alike. When an opportunity arrives, you’ll already be ready to close.