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Why Legal Surprises Are the Fastest Way to Kill a Deal
Here's how to fix them:

This week, we're covering:
Why unresolved legal issues are one of the fastest ways to tank a deal
5 questions to uncover hidden legal and compliance risks in your business
3 steps to start building a clean legal foundation before you go to market
Let’s dive in.
💡 One Big Idea
Why Legal Surprises Are the Fastest Way to Kill a Deal
Buyers can forgive a lot of things when it comes to buying an attractive business.
But legal risk is one thing they just can't overlook.
Whether it's a pending lawsuit, messy contractor agreement, or outdated compliance policies that haven't been touched in years, these are red flags that will surface during due diligence (and make buyers nervous).
The result? Delays, renegotiations, or walkaways.
The good news is that most legal risks can be cleaned up — but only if you address them early on.
That’s why the smartest, most prepared founders do a full legal audit well before they ever talk to buyers. They work with legal counsel to tighten contracts, resolve disputes, and document everything that matters.
Because nothing builds buyer confidence like a clean legal profile.
And nothing kills it faster than a surprise that could have been prevented.
Your Action Items:
Hire legal counsel to do a full document review: Think contracts, IP assignments, equity agreements, leases, and any third-party licenses. You’re looking for missing, outdated, or unclear terms.
Resolve open issues now, not during diligence: Pending litigation or unpaid royalties? Start fixing it now. Even partial progress shows buyers you’re serious.
Keep all agreements centralized and buyer-ready: Put all your signed contracts, compliance records, and regulatory docs in your data room. It’s not just about transparency — it’s about trust.
If you need help with any of this, just reply to this email or contact us here to learn more. I'm happy to walk you through what the process looks like wherever you're at in your journey.
❓ 5 Key Questions to Ask Yourself Today
Before you even think about an exit or talk to a buyer, there are several important questions you should be asking yourself.
The five questions below are anything but easy to answer. In fact, they'll challenge you to think about things you may never have before. But they could be the difference between a clean and confident exit, or one you wish you could take back:
1️⃣ If a buyer asked for proof of IP ownership, especially from former employees or contractors, could you produce it today?
If not, that’s a high-risk gap.
2️⃣ Are your customer and vendor contracts clear, enforceable, and assignable to a new owner?
Poorly written contracts or ambiguous terms can stall negotiations.
3️⃣ Do you have any open legal matters (even small ones) that could raise concerns during diligence?
Remember, it’s not just the issue. It’s how you handle it that matters.
4️⃣ Are you fully compliant with the regulations that govern your industry?
Think GDPR, HIPAA, SOC2, etc.
5️⃣ Who on your team is responsible for legal risk management, and how often is it reviewed?
If the answer is “just me” or “we haven’t looked at this in a while,” start there.
📋 3 Action Items For This Week
☑️ Schedule a 30-minute call with your business attorney: Ask them what legal gaps they’ve seen tank deals and whether any apply to your business.
☑️ Audit your IP assignments and employment agreements: Make sure all past and present team members have signed agreements that assign their work to the company.
☑️ Create a shared folder for legal documents and compliance records: This will eventually live in your data room, but start building it now.
That’s all for this week.
Remember, you don’t have to be perfect. But you do need to be proactive. A clean legal foundation could be the difference between a smooth exit and a deal that never gets off the ground.
Reply to this email if you have any questions or need any help with this.
Talk next week,
Brian
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