Due Diligence Documentation

You don't need to build a massive data room to start fundraising. It's a huge waste of your time and needlessly delays you getting started. Investors don't need to see your articles of incorporation on the first date. Giving them everything at once is overwhelming and needlessly leaks your info early. Here’s the systematic approach I teach: The Progressive Data Room. You drip-feed information based on investor engagement. These aren't set in stone below and will vary if the investor asks for some things earlier. The key is to protect your most important information until they have shown real signs of interest such as multiple meetings or a term sheet. → Stage 1 (Initial Interest): The Teaser Your teaser deck or executive summary. That's it. Think of it like a 30-second TV commercial. Your goal here is to get the first meeting. → Stage 2 (Post-First Meeting): The Validation They're interested and want more. Now you share core materials. • Financial model (3–5 year forecast) • Strategic roadmap • Product demo video • Team bios and roles • Detailed market analysis • User research or insight backing the problem • Competitor analysis • Testimonials, pilots, or case studies • LOIs, MOUs, pilot agreements • Anonymised customer list (only if requested) • Press coverage or PR (nice to have) • Risks and mitigations (nice to have) → Stage 3 (Deep Due Diligence): The Full Works They're serious and talking terms. Now, you open up or complete the full data room: • Cap table modelling spreadsheet (current and future rounds) • Term sheet (if applicable) • Corporate and legal documents: – Articles of Association – Shareholder Agreement – Share register – Previous investment documents such as SAFEs or convertibles • Historical profit and loss statements (management accounts) • Annual accounts • Key contracts and IP assignments • Registered patents (if any) • Customer lists Treat your data room like a conversation, not a document dump. It protects your company information and gives you more time  to pull together documents as momentum builds. 👋 I’m Sutin Yang, SeedLegals Angel Investor of the Year 2025, 5 years experience leading accelerators, former entrepreneur, and ex-JPMorgan investor with 12 years’ experience. 📌 Follow me for more useful fundraising tips and stories.

How I protect buyers when acquiring producer points Due diligence isn't optional. It's everything. When you're buying producer overrides, here’s what I verify:  1. Track titles and ISRCs match legal docs  2. Income stream type + override % are accurate  3. SoundExchange LODs are clear and filed  4. Advance terms: recouped or not, how much  5. Confirm assignability—many aren’t transferable  6. Match artist, album, label, and payor  7. Double-check all-in vs. net splits  8. Confirm catalog-level vs. track-level rights  9. Link every row to a real contract 10. Review genre, release date, duration for consistency A great deal can turn sour fast without this. Buyers deserve clarity, not surprises. What do you always check before closing a rights deal?

Responding to a Due Diligence Request vs. the Disclosure Schedule In the last couple of months, I've been advising a couple of ventures doing their first priced equity rounds. I realized that the founders were confused between their response to their investors' due diligence request and the Disclosure Schedule they were required to create for the Stock Purchase Agreement of their equity financing. ⏹ Due Diligence Request - Typically the lead investor will send the company a lengthy due diligence request and the company will respond by setting up a data room filled with responsive documents and data. ⏹ Disclosure Schedule - This is a list of exceptions to the Company representations and warranties set forth in the Stock Purchase Agreement. While related, these efforts are distinct. An example: ⏹ Representation: The company is not the subject of any pending litigation. ⏹ Reality: The company is a party to a pending litigation Jones v. ABC Corp. ⏹ Reponse to Due Diligence Request: The Company should disclose a summary of the litigation and relevant documentation. ⏹ Disclosure Schedule: The disclosure schedule should list Jones v. ABC Corp. as an exception to the no-litigation representation. Consequences: ⏹ If the Company loses Jones v. ABC Corp. and incurrs loses, if the litigation was not listed in the Disclosure Schedule the Company could be liable for breach of representation and warranty. ⏹ If the Company loses Jones v. ABC Corp. and incurrs loses, if the litigation was disclosed in response to the Due Diligence Request but it was not listed in the Disclosure Schedule, the Company could still be liable for breach of representation and warranty. ▶ Bottom Line: These are parallel drills, information must be diclosed in both places. #venturecapital

Due Diligence Isn’t a Test You Can Cram For Buyers don’t take your word for it—they verify everything. ✅ Every contract ✅ Every ownership document ✅ Every board decision and financial record If your records are incomplete or disorganized, your credibility and negotiating power disappear fast. Due diligence doesn’t just confirm value. It looks for reasons to discount it. Here’s how diligence readiness evolves across 4 stages: 🔻 Stage 1: Chaos (Difficult to Sell) Docs are scattered across inboxes and desktops. Even basic requests—like incorporation docs—cause delays. 🔍 Fix it: • Set up a simple folder system: Legal / Governance / Contracts / Financials / HR • Start gathering key docs now: Articles, agreements, tax IDs 🟠 Stage 2: Incomplete (Sellable, But Risky) Some docs exist, but others are missing or unsigned. Buyers start to wonder what else is hidden. 🔍 Fix it: • Audit your records from a buyer’s POV: Can they find everything in 10 minutes? • Replace drafts with signed, final agreements now 🟡 Stage 3: Organized (Investor-Ready) Most documents are clean and accessible. Buyers move through diligence without major roadblocks. 🔍 Fix it: • Prepare a Due Diligence Checklist before going to market • Pre-collect fully executed contracts, equity docs, and key approvals 🟢 Stage 4: Diligence-Proof (Strategic Buyer Magnet) Your data room is plug-and-play. Buyers sail through diligence—speeding time to close and reducing legal friction. 🔍 Fix it: • Build a secure Data Room (Dropbox, Google Drive, or M&A platform) • Create a 1-page Diligence Index to show buyers exactly where to find everything Bottom Line: 📉 Deals don’t fall apart at closing—they fall apart during diligence. 📈 Bulletproof records = higher offers + faster closes. Want to identify hidden risks before buyers do? → Download our Free Sellability Checklist (See what serious buyers really look for.) #MergersAndAcquisitions #ExitPlanning #DueDiligence #BusinessSale #SellYourBusiness

Trust, but when it comes to multifamily due diligence - verify. On every multifamily deal I’ve closed, I’ve found a financial “inconsistency” or two. Some big, some small - but all avoidable if you treat due diligence like a CSI investigation. Quick story: My first multifamily deal came with clean-looking utility records. The seller confirmed tenants paid gas and electric, and showed me water bills. What I didn’t ask? Who pays for the common area electricity. I found out a month later, when a tenant asked about her rent discount for covering the hallway lights. That cost wasn’t in my underwriting, and it stuck with me. Since then, I’ve incorporated a better system to confirm utility costs and plan smarter operations. Here are 6 utility-specific due diligence steps I never skip: 1. Ask for 12 months of invoices. Not summaries, actual bills. They reveal seasonality and how well expenses are tracked. 2. Call utility companies. Confirm past usage, ask about rate hikes, and see if rebates or flat-rate options exist. 3. Review vendor agreements. Check for existing deals on internet, cable, or gas and renegotiate where possible. 4. Ask your experts. Get input from property managers, plumbers, HVAC pros, and electricians. 5. Read every lease. And every subsidy doc. Don’t rely on general claims like “tenants pay all utilities.” 6. Talk to the tenants. They’ll tell you what’s working, what’s not, and what they’re actually paying. Your goal? Verify everything. Build a clear plan before you close. Due diligence is how you build a smarter investment - starting from day one. What’s one utility lesson you’ve learned the hard way?

A Business Buyer’s Due Diligence Checklist ✔️ May not be everything needed for every deal, make sure to work with professionals! ✔️ Teaser: Overview of a company and its financial performance ✔️ NDA: “Non-disclosure Agreement” Ensures confidential information about business is not shared. ✔️ CIM: "Confidential Information Memorandum" provides all the details about the target company. Includes an Executive Summary, Financials, Company History, maybe industry/location info. ✔️ LOI: “Letter of Intent” Non-binding offer to buy the company, and preliminary details of the deal structure. Also includes due diligence period, target closing date, and exclusivity. ✔️ Management Meetings: Video or On-site meet with the Seller, and sometimes key employees. ✔️ Quality of Earnings (QofE) Report: Evaluation of the target company's financials to ensure the financials are accurate. Done by a 3rd party, usually a CPA. ✔️ Operations and Technology Review: Detailed review of the Employee List, Vendor List (and lines of credit), Client List, SOPs, Employee Handbooks, Employment Contracts, Independent Contractor Agreements, etc. Complete list of all software, social media, email, and website accounts and passwords. ✔️ Management Team and HR: Evaluate the target company's management team and human resources to ensure alignment with acquirer. ✔️ Legal and Regulatory Compliance: Evaluate the target company's contracts, terms of service, engagement letters, tax filings, corporate filings, and licenses. ✔️ Ownership Transition Plan: Design/Review the plan for operating the company post-closing. (Typically 30-60-90 day plan) ✔️ Finalize Deal Structure: Determine the final deal structure and terms based on the results of the due diligence process (should hopefully match LOI). ✔️ Close Deal: Complete the transaction and transfer ownership of the target company to the Buyer Some big surprises I’ve seen: ⚠️ Don’t forget Accumulated Employee Paid-Time-Off (PTO) ⚠️ Vendors may not offer the same Line of Credit amount/terms to a new owner - adjust working capital ⚠️ Employees may be paid less than market rate, and buyer incurs the cost of leveling salaries ⚠️ Annual Service Agreements the Buyer must fulfill without receiving revenue ⚠️ Un-filed State Sales or Employment Taxes passed on to the Buyer Need help with your deal? DM me 📩 ~~ #dealmakers #businessbroker #MandA #Entrepreneurship #DueDiligence

Due Diligence for CFOs: Critical Questions to Address As CFOs advance through the acquisition due diligence process, it is crucial to foster open and transparent communication with the target company’s management team. This phase requires CFOs to seek deeper insights and clarifications on various financial, legal, and commercial aspects uncovered during the initial review. By fostering a collaborative dialogue, you aim to gain a comprehensive understanding of their operations and set the stage for a successful integration. To achieve this, it is crucial to gather detailed answers to the following questions to address key areas and obtain the essential information needed for informed decision-making: 1. Financial Due Diligence: - Financial Health: Describe any significant changes in the company’s financial health over the past three years and any upcoming financial obligations that could impact cash flow. - Accuracy of Financial Statements: Clarify any discrepancies in the financial statements and the reliability of the provided financial projections. - Undisclosed Financial Risks: Confirm that all undisclosed liabilities have been disclosed and detail any financial risks associated with contracts or commitments. 2. Legal Due Diligence: - Legal Compliance: Explain how the company ensures compliance with applicable laws and any pending legal issues that might affect the acquisition. - Intellectual Property Rights: Provide a detailed breakdown of the company’s intellectual property assets, including any pending or past infringement claims, and describe how these rights are protected. - Legal Liabilities: Detail any ongoing litigations or legal issues that could impact the company’s financial standing and potential liabilities related to contracts, warranties, or indemnities. 3. Commercial Due Diligence: - Customer Retention and Transition Analysis: Outline strategies for retaining customers during the acquisition and managing the transition to the acquiring company. - Market Positioning and Competitive Landscape: Assess the company’s market positioning, competitive strengths, and differentiation strategies. - Revenue Profile: Identify any anticipated changes in revenue streams post-acquisition and how the revenue models will integrate with those of the acquiring company. Collecting these answers is crucial for assessing the financial stability, legal standing, and commercial viability of the target company. This thorough due diligence helps ensure informed decision-making, mitigates potential risks, and identifies any hidden liabilities or issues that could impact the success of the acquisition. Join our preview event with Future CFO to learn essential skills and insights CFOs need to succeed: https://lnkd.in/ezf5nccm  #FutureCFO #DueDiligence #Acquisition #LegalCompliance #BusinessAcquisitions

The biggest mistake you can make when buying a business? Believing everything the seller tells you 🤣 Client: I’m looking at buying this company. What should I be focusing on? Me: Let’s start with the most important thing the due diligence. You’re not just buying a business but you’re buying its financials, its reputation, its risks, and its potential. If you don’t verify everything upfront, you’re walking into a deal blindfolded. Here’s what I tell every client before they even think about signing on the dotted line 💼 Step 1: The Right Information Matters Before you even consider making an offer, you need full access to: ✔ Financial Statements – Are they profitable, or just good at hiding losses? ✔ Tax Filings – A company that hasn’t paid taxes properly will become your problem. ✔ Legal & Compliance Docs – Pending lawsuits? Regulatory issues? Let’s find out before they find you. ✔ HR & Employee Agreements – Who’s staying, who’s going, and what liabilities exist? ✔ IT & Security – You don’t want to inherit a cybersecurity mess. 📂 Step 2: Get in the Data Room A well-organized data room should have everything you need. If it doesn’t? 🚩 That’s a major red flag. Missing documents, vague answers, or slow responses? That’s a seller trying to hide something. 🔍 Step 3: Read Between the Numbers Due diligence isn’t just checking boxes but about spotting trends and risks. Declining revenue? Unusual expenses? Liabilities that don’t add up? T hat’s where you make or break a deal. Client: What if the numbers look good, but something feels off? Me: Then we dig deeper. Numbers can be manipulated, but patterns don’t lie. If something doesn’t add up, we keep asking questions. The right deal will stand up to scrutiny. The wrong deal will fall apart when you start asking the right questions. Make sure you know what you’re getting. #BusinessBuying #MergersAndAcquisitions #DueDiligence #BuyingSmart #Entrepreneurship #DataRoom #BusinessStrategy

𝗦𝘁𝗮𝗿𝘁𝘂𝗽 𝗗𝘂𝗲 𝗗𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝗖𝗵𝗲𝗰𝗸𝗹𝗶𝘀𝘁: 𝗔𝗿𝗲 𝗬𝗼𝘂 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿-𝗥𝗲𝗮𝗱𝘆? Before investors commit, they 𝘤𝘩𝘦𝘤𝘬 𝘦𝘷𝘦𝘳𝘺𝘵𝘩𝘪𝘯𝘨. Miss a step, and your deal could fall apart. ✅ 𝙇𝙚𝙜𝙖𝙡 𝙍𝙚𝙖𝙙𝙞𝙣𝙚𝙨𝙨 ☐ Contracts are clear & legally valid ☐ Equity promises are documented ☐ Stamp duty is paid on agreements ☐ IP is protected (patents, trademarks) ✅ 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙃𝙚𝙖𝙡𝙩𝙝 ☐ No ad-hoc accounting entries ☐ Books of accounts are updated ☐ Statutory payments are on time ☐ Taxes, TDS & foreign payments are compliant ✅ 𝙍𝙚𝙜𝙪𝙡𝙖𝙩𝙤𝙧𝙮 𝘾𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 ☐ Statutory registers & share certificates are maintained ☐ Government registrations are up to date 𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 Due diligence isn’t a formality It’s what 𝗯𝘂𝗶𝗹𝗱𝘀 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗰𝗼𝗻𝗳𝗶𝗱𝗲𝗻𝗰𝗲 And ensures 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆. Neglect it, and your startup’s future is at risk. 𝗛𝗼𝘄 𝗺𝗮𝗻𝘆 𝗯𝗼𝘅𝗲𝘀 𝗰𝗮𝗻 𝘆𝗼𝘂 𝘁𝗶𝗰𝗸? #StartupChecklist #InvestorReadiness #LegalCompliance #FinancialHealth

The first time I went through VC due diligence, I knew exactly what to expect. Not because I’d raised before. But because I came from investment banking. And in banking? Diligence starts before the deal is even live. You prep for every red flag. Every doc has a backup. Every “what if” already has an answer. So when we signed our term sheet, I didn’t celebrate early. I got to work. Here’s how we stay ahead: 1. Contractor agreements: Every freelancer we’d ever paid? Papered, signed, organized. 2. IP clarity: No personal GitHub accounts, no mystery contributions. Locked down. 3. Financials: Clean, reconciled, and easy to understand. Even for a partner skimming in a hurry. We didn’t scramble. Because our data room was already built. Built like a banker. Organized like we were raising tomorrow. Designed to make a VC nod on slide 1. Pro tip: Don’t wait for diligence to start cleaning up. The second you raise your Seed, act like you’re about to be audited. Teaser: We’re building a feature inside Capwave that scans your data room for red flags, before the VC finds them. Founders: what’s the wildest thing you’ve had flagged in diligence? VCs: what’s the most common mistake you still see? #startups #founders #venturecapital #fundraising #duediligence