What was broken
A logistics-technology company received an acquisition approach from a larger strategic buyer. The founders wanted to be transaction-ready, but their compliance, contracts, and financial records were not organised to withstand acquirer diligence, and unaddressed gaps risked delaying or repricing the deal.
What we did
CapEasy ran a sell-side readiness exercise — organising financials and tax records, closing compliance and secretarial gaps, reviewing key contracts for change-of-control and assignment terms, and assembling the diligence data room. We surfaced and remediated risk areas before the acquirer's advisors reached them.
Where it landed
The company entered acquisition diligence organised and remediated, allowing the process to proceed efficiently and with fewer value adjustments. The founders negotiated from a position of readiness rather than reaction.
A buyer's diligence team is pricing your records, not just your revenue
When a strategic acquirer moves from a term sheet to diligence, its finance team and CPA advisors are not re-checking that the business is real — they are testing whether your records let them price it with confidence. A quality-of-earnings review pulls trial balances across multiple years and traces revenue, add-backs and one-time items back to source documents. Every adjustment the buyer's team cannot verify against clean records becomes either a delay while it gets chased down, or a discount priced in because the buyer assumes the worst version of the answer.
The same readiness exercise applies whether the deal is structured as a stock sale of a Delaware corporation or an asset purchase. A stock sale under Delaware General Corporation Law §251 requires a board-approved merger agreement and, depending on structure, exposes dissenting stockholders to appraisal rights under §262 — which means the corporate record (board consents, stockholder approvals, the stock ledger) has to be as clean as the financial one before signing, not assembled afterward under time pressure.
Asset sale or stock sale, the IRS wants the same allocation both sides agree on
If the deal is structured as an asset purchase — common for smaller strategic acquisitions where the buyer wants specific assets and contracts rather than the whole entity — both the buyer and the seller are generally required to file Form 8594, Asset Acquisition Statement Under Section 1060, with their federal returns for the year of the sale. The form allocates the purchase price across seven statutory asset classes in order: cash and deposits, actively traded securities, mark-to-market assets and debt instruments, inventory, tangible property, Section 197 intangibles, and finally goodwill and going-concern value.
The two sides' Form 8594 filings are expected to agree, because the IRS can and does cross-reference buyer and seller allocations. A sell-side readiness exercise that has already built a defensible fixed-asset register and a clean intangibles schedule turns purchase-price allocation into a negotiation over categories the parties already understand — instead of a scramble to value goodwill and equipment for the first time during closing week.
The working-capital schedule that sets your true-up
Most acquisition agreements price the deal off a working-capital target, or "peg," calculated from the target's historical average — then true up the final purchase price after closing against actual working capital delivered, using an agreed closing-date balance sheet. If your accounts receivable ageing, accrued liabilities and deferred revenue have not been tracked consistently, the buyer's team sets the peg using their own conservative read of your numbers, and the post-closing adjustment lands in their favor by default.
A working-capital schedule maintained monthly — receivables aged, payables current, accruals booked on the same cadence every close — does two things a rebuilt-at-diligence version cannot: it gives your side a defensible historical average to negotiate the peg from, and it means the closing-date balance sheet the true-up depends on is a normal month-end close, not a special exercise built under deal-team scrutiny.
Clean-room discipline: what goes in the data room, and when
A data room is not just an upload folder — competitively sensitive material (pricing, customer lists, unreleased product plans) is typically staged behind a clean-room protocol so only the buyer's outside counsel and financial advisors see it before signing, not the buyer's own commercial team, particularly if the acquirer is a strategic competitor. Getting this sequencing wrong is its own risk: oversharing commercially sensitive data before there is a signed agreement can taint the deal even if the numbers themselves are clean.
CapEasy's part in sell-side readiness is the financial and compliance half of that room: reconciled books, the fixed-asset and intangibles detail Form 8594 will need, a working-capital schedule with history behind it, and secretarial records that match what was actually filed. Reviewing merger agreements, structuring the deal as a stock or asset sale, and managing clean-room access sit with your M&A counsel; anything filed with the IRS or a state runs through the partner CPA firms we work with across 15 US states.
What to take from it
- A quality-of-earnings review prices your records, not just your revenue — every unverifiable adjustment becomes a delay or a discount.
- Whether the deal is a stock sale or an asset sale, the corporate record has to be as clean as the financial one before signing, not assembled during closing week.
- An asset purchase means both sides file Form 8594 allocating price across seven statutory classes — and the IRS expects the two filings to agree.
- The working-capital peg is set from your historical average; a schedule maintained monthly gives you a defensible number to negotiate from instead of the buyer's conservative read.
- A data room needs clean-room sequencing, not just an upload folder — competitively sensitive material stays behind counsel until there is a signed agreement.