Business Law: Have your Company Ready to Show for when Buyers Come Calling

Thinking of selling your company? Even if the time is not right, it is never too early to make sure that your company’s basic documentation is in place.

Prospective buyers will typically conduct due diligence by asking to see certain records.

At best, companies that have such documents in place are in a better position to receive the expected value of the transaction.  At worst, lack of business documents, particularly with respect to the ownership and rights in your assets, can leave business owners scrambling to create or re-create them in response to a due diligence request as a closing deadline looms.

Both parties should sign a non-disclosure agreement (NDA) to ensure the confidentiality of sensitive company information before responding to a request from a prospective buyer. Non-disclosure agreements in general can be very complex and should be discussed with an attorney on a case by case basis.

There are several things to keep in mind for businesses organized with a corporate structure equivalent to a limited liability company or partnership.The list below represents a very basic outline of the documents that a business owner should be able to produce, or in some cases explain in lieu of, when responding to a due diligence request from a prospective buyer.


Initial charter and all amendments are generally available online the State Department of Assessments and Taxation (SDAT) website if personal records are incomplete. Older documents may not be available online, but can be recovered in person at the SDAT offices. Companies can avoid the drama of catching up on back-year filings to revive a forfeited charter if they file all company personal property tax returns in a timely fashion and are in good standing with the SDAT.

Governing instruments:

Among other things, the company bylaws should be sure to reflect the current status and practice of your board of directors.  Companies with more than one stockholder should have a stockholders’ agreement.  The stockholders’ agreement covers governance issues, such as any respective rights of voting and non-voting stockholders, actions that require super majorities, and any buy-sell arrangements for departing stockholders.

Corporate minutes:

Corporate minutes should document the outcome of director and stockholder meetings with specific evidence of any other major decisions that require the approval of directors or stockholder’s.

Foreign jurisdictions:

These documents register the company as a foreign corporation qualified to do business in other states or countries.


The company should be able to produce evidence and detailed documentation of all officer loans, security instruments or other loans and obligations. This should also include any guaranties or indemnity agreements to which the company is a party, obligor or beneficiary. Also provide records of all claims, mortgages and other liens on company assets.


Buyers are often interested in continuing to employ some of an acquisition’s staff when purchasing a business. A potential buyer will want to see a list of all employees, their salary and benefit information. Employment agreements such as employee severance and non-compete or restrictive covenants inform the buyer of their future obligations.

Real property:

A buyer will want to see all deeds to company real estate as well as any options or contracts of sale that affect the property.  Buyers may also want to review title insurance, available surveys and appraisals. Companies that lease their facilities should provide all leases, subleases or options to lease or sublease.


Buyers usually want to see all significant contracts to which your company is a party and any standard form contracts routinely used, such as with customers or suppliers.


It may be prudent to consider withholding a customer list until shortly before closing, especially if the business’s main asset is customer or client relationships. A non-disclosure agreement should protect sensitive customer information.  However, the risk of suing under the NDA for misappropriation of customer information exists if the deal fails to close.


Disclose all litigation on record that is underway or even has been threatened or previously formally discussed. This includes claims or potential claims by or against competitors, suppliers and employees, and with any applicable regulatory agencies.


Disclose all insurance policies and contracts for property and casualty insurance including declaration pages and endorsements.

Intellectual property:

This sometimes forms its own category in the form of a separate and detailed due diligence request. In very broad and summarizing terms, a buyer will want to know how you own or have rights to any intellectual property in the business.

You should be prepared to list and describe:

  1. Trade names, trademarks, service marks and logos
  2. Internet domain names
  3. Patents, patent rights, innovations and designs (whether or not patented), processes, know-how and technical data
  4. Third-party intellectual property used under a license
  5. Copyrighted materials such as software, databases and systems
  6. Any other intellectual property used in connection with the business.

A company’s potential buyer will often request a longer and more detailed list, but having the above information ready will strengthen your bargaining position in the process. To learn more about Maryland business law, contact the business, commercial litigation and intellectual property lawyers at Bowie & Jensen, LLC. today.