My first encounter with a failed M&A deal happened when the founder refused to provide common representations and warranties. He also declined to fix compliance issues found during due diligence.

By the time the founder pulled out, both founder (seller) and buyer had already spent significant time in weekly due diligence meetings. Fees had been incurred to engage legal, financial, and tax advisers.

The way the founder abruptly exited the deal raised doubts about his credibility.

If you’re building a business with an eventual exit in mind, you should expect to give standard representations and warranties, such as:

• That you own the shares free from encumbrances
• That you have the legal capacity to sell
• That the company’s accounts comply with the relevant accounting standards

If issues come up during due diligence, be prepared to address them before signing, as conditions precedent, or even post-closing.

M&A legal advice isn’t just something to think about when there is a buyer. It’s for founders who want to build a business they can confidently stand behind and are prepared to sell when the time comes.

This post was first posted on LinkedIn on 15 April 2025.