From Headline Price to Cash in Hand: Navigating the Final Stretch of your Business Sale

We’ve seen it happen: a week into due diligence, a share certificate is found to have gone missing, a key supplier’s consent has been overlooked, or an unresolved SARS query appears. Confidence slips, time drags, and the buyer requests a price adjustment.

It’s preparation - not bravado - that determines whether a deal holds its value to the finish.

Why Due Diligence Is Where Deals Are Won or Lost

Every sale triggers a process called due diligence. This is where buyers and their advisers scrutinise every corner of your business: from finances, contracts, intellectual property and tax history to governance and more. No stone is left unturned. The purpose here is straightforward: to confirm that what they think they are buying is, in fact, what they are getting.

Sellers should realise that this is not just a box-ticking exercise. Often this process makes or breaks a sale.  Due diligence can stretch for weeks or months and this is frequently the moment when hidden risks surface. These risks don’t just slow the sales process -  they hand buyers leverage to renegotiate, or - worse -  walk away entirely.

Three factors have significant impact on how much a buyer will ultimately pay:

• Competition: more bidders can push the price up.
• Certainty: the clearer the pathway to closing, the more confident buyers become.
• Time: delays erode value. When momentum fades, offers soften.

Many founders concentrate on chasing multiple bidders, hoping for a bidding war. We have found that the best outcomes stem from creating certainty and compressing time - and that process begins long before you open your data room for due diligence.

The Common Traps That Undermine Value

Certain issues derail deals again and again. They may seem technical, but they go to the heart of trust between buyer and seller.

1. Unclear ownership:
   If your company’s legal records don’t match its lived reality, buyers will think twice. Share registers must reconcile with signed certificates and resolutions. Even minor gaps can stall progress.
2. Options and convertibles:
   Maintain a single, current record of all stock options and convertible instruments, such as SAFEs and convertible notes. Inconsistent or missing information here can trigger red flags and stall the closing process.
3. Change-of-control clauses:
   Some customer or supplier contracts require formal consent before a sale. Surprises here give buyers unwanted leverage.
4. Tax exposure:
   Assume that outstanding returns or unresolved SARS correspondence will be rigorously tested. A clean tax position builds confidence and maintains momentum.
5. Key-person dependency:
   If your business depends too heavily on one founder or executive, buyers discount the price. Succession plans must be in place and well documented.
6. Disputes and litigation:
   Pending or threatened disputes create uncertainty. Quantify your exposure upfront and outline a resolution plan.
7. Intellectual property gaps:
   Ensure all IP is properly assigned to the company, and that trademarks, domains, and licences are up to date.
8. Informal employment promises:
   Exit bonuses or handshake agreements should be formally documented. Teams remember and buyers will ask. Avoid embarrassment by having everything in writing.
9. Related-party transactions:
   Any dealings with shareholders or affiliates must be transparent and at arm’s length.

If any of these issues cannot be fully resolved, make a point of assembling a precise dossier of facts, correspondence and mitigation plans, and disclose it early. Controlling the narrative here helps preserve value.

Why These Details Matter More Than You Think

Left unaddressed, these issues don’t just slow a deal -  they can fundamentally change its economics to your detriment.

An incomplete cap table, for instance, might trigger anti-dilution clauses or violate investor rights. A missing consent could invalidate a major contract. A vague disclosure could open the door to warranty claims months after closing.

Buyers scrutinise how a seller responds to these red flags. A well-prepared, transparent disclosure builds trust. A messy or evasive response signals weak governance, causing buyers to lower their offer or increase protections in the final agreement.

“In my experience, deals are most successful when sellers address key risks upfront. Being truly market-ready gives buyers confidence and greatly improves the probability of closing.” — Tiaan Smit, Former Transactions Director, Benchmark International

How to Take Control Before the Sale

The solution isn’t complicated, but it does require discipline and time. By addressing these issues before you start negotiations, you retain control of the process and protect the value of your sale.

Here’s a practical timeline:

• First 30 days: Audit corporate records, map consent requirements, refresh employment policies, and review licensing.
• Next 90 days: Tighten board governance, update IP registrations, clean up related-party transactions, and review major contracts.
• Next six months: Resolve disputes, optimise tax structures, improve reporting systems, and implement succession planning.

This approach transforms due diligence from a painful obstacle into a smooth confirmation exercise, allowing you control over your exit.

The Role of Warranties and Risk Allocation

The unfortunate reality is that - even with perfect preparation - sellers rarely walk away with the entire headline price.

Warranties -  the promises you make about your business and its history -  determine how much of that price you ultimately receive and retain. They cover everything from ownership and authority to contracts, compliance, and tax.

Key tools for managing warranty risk include:

• Disclosure schedules: Detailed disclosures prevent future claims. Specific facts close doors that vague statements leave open.
• Liability limits: Negotiate caps, time bars, and exclusions to protect against such open-ended exposure.
• Funding mechanisms: Buyers often require a portion of the purchase price to be held back or placed in escrow. Model these scenarios carefully to avoid surprise tax consequences.

Turning Complexity into Confidence

The real cost of poor preparation is rarely visible on the balance sheet. It shows up in lost leverage, dragged-out timelines, and final prices that fall far short of the headline figure. By tackling risks early and controlling the flow of information, sellers can move from reacting to driving the process - and protect the legacy they’ve built.

Caveat Legal helps business owners take control long before negotiations begin, transforming due diligence from a potential deal-breaker into the smoothest part of the journey. DM

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Author: John Taylor and Sarah Lawrence, Mergers & Acquisitions at Caveat Legal