*Amendments to contracts that are not fully signed
*Director and shareholder resolutions that are unsigned or misplaced
*Material contracts that are not assignable by the seller in the event of a sale of the company
*Existing and previous employees or contractors not having signed confidentiality agreements or intellectual property assignment agreements
*Employment or contractor agreements that should be in place but are non-existent
*Financial statements will be intensively vetted
*Existing litigation or other claims that may effect the seller and the assets being sol
To avoid these along with other unforeseen problems, it can be pragmatic to undertake a due diligence on your own company before a buyer does their own.
Multiple bidders enhance the seller’s position and can drive up prices
Due to the lack of available information about comparable deals in the cannabis sector, having multiple bidders can be extremely useful to a seller. Not only does it help the seller calibrate what a realistic price might be, it also can drive up that price as a result of competition between the buyers. Sellers should use this to their advantage, be patient, and bring multiple bidders into the process if possible. However, sellers should also be mindful of any contractual terms that may restrict them from entertaining other offers or bids during a period of time. Of course, industry conditions will heavily influence whether it is a buyers or a sellers’ market.