Beyond accounts and figures, a serious buyer will always thoroughly review a business's legal affairs as part of the due diligence process. The better documented these matters are before you list for sale, the faster the process can move — and the lower the risk that missing paperwork creates distrust or gives grounds to negotiate the price down.
Company documents and ownership
Make sure articles of association, incorporation documents and any later amendments are collected and up to date. If there are multiple owners, an ownership agreement should exist in writing and reflect the actual ownership split — unclear ownership is one of the most common reasons a deal gets unnecessarily delayed.
Commercial agreements and contracts
Review and gather all significant commercial agreements in writing — distributor and agent agreements, supplier contracts, license agreements, sales and delivery terms, any franchise agreements, and lease agreements for premises. Verbal agreements or vague, unwritten understandings are hard for a buyer to rely on and should be formalized well before a sale process begins.
Pledged assets and debt
Get a clear overview of which assets — inventory, equipment, vehicles or other — are pledged as security for the business's debt, and which debt a buyer can take over along with the assets. Ambiguity here can make an otherwise simple deal unnecessarily complicated to structure correctly.
Insurance
Document the business's insurance coverage: business and business-interruption insurance, professional liability insurance, any industry-specific insurance, and mandatory workers' compensation insurance. A buyer will often ask specifically whether the coverage is adequate and can be continued after a takeover.
Employment
Make sure all employees have written employment contracts that meet current requirements, and that any collective agreements are documented. If you've used non-compete or non-solicitation clauses with employees, they should be up to date and legally sound — outdated clauses risk not being enforceable at all if it becomes relevant.
Intellectual property
If there are patents, trademarks or designs registered in the business's name, the registrations should be up to date and documented. The same goes for domain names that are part of the business — see our walkthrough of how to avoid disputes over domain names and trademarks.
Working environment
If the business has employees, an up-to-date workplace assessment (APV) is a legal requirement in Denmark — and something a buyer will often request as part of their review of the business's general compliance level.
Environmental approvals
If operations require environmental approvals, they should be valid and up to date. If there's a historical risk of soil contamination on a property the business uses, it's better to investigate it yourself early than to have a buyer discover it during the process.
Product safety
If the business sells physical products, you should be able to document that they meet applicable Danish and European safety requirements. Missing documentation here can, at worst, raise doubts about the whole business foundation in a buyer's eyes.
Permits and approvals
If the industry requires special permits or regulatory approvals to run the business legally, they should be gathered, valid, and it should be clear whether they can be transferred to a new owner, or whether new approvals need to be sought after a takeover.
Pending disputes
If there are pending lawsuits, complaints or claims against the business, they should be disclosed openly and early in the process. Discovered by the buyer during due diligence instead of disclosed by you, it damages trust far more than an early, open disclosure would have.
Why does it pay off to do this before you list for sale?
Most of these matters will be requested by a serious buyer during due diligence regardless. The difference between having it in order in advance and only digging it out once the buyer asks is often the difference between a process that runs smoothly and one that drags out for weeks or months — with the risk of the buyer losing trust or negotiating the price down along the way.
Frequently asked questions
How long does it take to get the legal affairs in order?
It depends on the complexity of the business, but the earlier you start — ideally as part of your general sale preparation — the less of a bottleneck it becomes once a buyer is found.
Should I disclose pending disputes myself, or can I wait for the buyer to ask?
You should always disclose it yourself, early in the process. Discovered by the buyer during due diligence instead, it damages trust far more than an open disclosure from the start would have.
Is an ownership agreement necessary if we're only two owners who agree on most things?
Yes. A written ownership agreement is relevant no matter how much you agree today — it becomes especially important if you ever disagree, or when a buyer needs to assess ownership during a deal.
Want help reviewing your business's legal affairs before listing it for sale? Book a no-obligation call, or read the full walkthrough of how to prepare the business for sale in general.
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