Practical guide · Selling a company
Why audit your company’s corporate records before selling?
The buyer will audit the company; the seller who audits first chooses what to fix before going to market rather than suffering it in the negotiation. A targeted corporate audit, on a closed scope, articles of association, registers, minutes, shareholders’ agreement, related-party agreements, beneficial-owner filings, real estate predominance where relevant, reveals the irregularities that cost price or timetable, and leaves time to cure them.
In every sale, information flows one way: the buyer discovers, the seller explains. Every irregularity discovered by the buyer becomes a negotiation argument, a condition precedent or a specific indemnity. The same irregularity, found and dealt with by the seller six months earlier, would have disappeared from the file.
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1. What the buyer will find anyway
Buy-side due diligence is systematic as soon as the deal has any stakes: data room, questionnaires, review of the articles, corporate decisions, capital and contracts. The buyer’s advisers are paid to find; they find. Incomplete registers, missing annual meetings, a clause in the articles contradicted by the shareholders’ agreement, related-party agreements never approved, untraceable delegations of authority: none of this escapes a serious review, and all of it ends up in the report handed to the buyer.
The seller should assume that everything irregular will be seen: the only variable is who sees it first, and therefore who controls the narrative.
2. The useful scope of a pre-sale corporate audit
The effective scope is closed and quickly covered: the articles and their consistency with actual practice, the corporate registers, the minutes of the last five financial years, accounts approvals and filings, the shareholders’ agreement and its compatibility with the articles, related-party agreements, beneficial-owner filings, the chain of title to the shares, and, for companies holding real estate, the real estate predominance characterisation that now dictates the form of the transfer deed. Tax, employment and commercial contracts are excluded: they belong to other reviews.
A closed scope is what makes the exercise useful: it can be priced, it fits the timetable of a sale process, and its conclusions are immediately actionable.
3. The most frequent irregularities and their weight in negotiation
Always the same findings: missing or late accounts approvals, registers not kept, old share transfers with unfinished formalities that weaken the chain of title, approval clauses in the articles ignored in past transfers, related-party agreements never approved, a shareholders’ agreement contradicting the articles. Each has its price in negotiation: a doubtful chain of title calls for a reinforced representation and sometimes a specific indemnity; missing approvals, a regularisation workstream under conditions precedent; an inconsistent shareholders’ agreement, waivers to be obtained from third parties at the most expensive moment.
The hierarchy is simple: everything touching title to the shares is treated with absolute priority, because it is the very object of the sale.
4. Curing before going to market: what can be fixed, what must be disclosed
Most corporate irregularities can be fixed: regularisation meetings, reconstruction of registers, approval of past agreements in the prescribed forms, alignment of the shareholders’ agreement and the articles, completion of the formalities of old transfers. What cannot be fixed is disclosed: a difficulty identified, explained and documented by the seller in the data room loses most of its negotiation value for the buyer. The worst scenario is the irregularity discovered by the buyer and concealed by a seller who knew about it.
The rule of conduct: fix what can be fixed, document what cannot, let nothing be discovered.
5. What the corporate audit does not cover
The exercise replaces neither the tax review, nor the employment review, nor the analysis of commercial contracts, nor a full vendor due diligence. It gives no opinion on value. Its object is the corporate foundation: what conditions the validity of the sale and the solidity of the representations the seller will sign in the warranty and indemnity provisions. It is precisely because its object is bounded that it can be run early, fast and at a controlled cost.
A seller who wants a full review sequences it: corporate first, because it conditions the sale itself, the other workstreams next, depending on the stakes and the profile of the prospective buyer.
6. Fitting the audit into the sale timetable
The right moment is upstream of the sale process, before buyers are even approached: regularisations by shareholders’ meeting require notices, sometimes third parties, and their haste in mid-negotiation shows. The audit’s conclusions feed three documents: the regularisation plan, the data room, and the representations of the future warranty, which the seller will then sign knowingly rather than discover in the other side’s draft.
A seller who knows its own file negotiates its warranty instead of enduring it: that is the real return of the audit, beyond the regularisations themselves.
Frequently asked questions
When should the audit start?
Before buyers are approached: regularisations require corporate decisions and sometimes third parties, and lose their discretion once the negotiation is open.
What about an irregularity that cannot be cured?
Document it and disclose it in the data room, with its analysis and consequences. A difficulty explained by the seller is negotiated; a difficulty discovered by the buyer is paid for.
Does the seller’s audit replace the data room?
No, it prepares it: the documents verified and organised during the audit form the core of the data room, and the conclusions guide what must be explained in it.
Who sees the audit’s conclusions?
The seller alone, protected by the lawyer’s professional secrecy. The seller decides what is cured, what is disclosed and what feeds the negotiation.
A sale contemplated in the coming months?
The firm runs the seller’s corporate audit, proposes the regularisation and prepares the sale. See also: how does a share sale work in France.
Mickaël Labigne, avocat, admitted to the New York and Paris Bars. About the firm.
Last updated: 5 October 2026.
This information is general and does not constitute legal advice. Every transaction calls for its own analysis.
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Corporate law · M&A · Shareholders’ agreements · Restructurings
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