Picture a young founder who has just sold 30% of his company to a strategic investor, at a price that exceeded his expectations and left him convinced the deal was a real achievement. Eight months later, the picture looks very different. The investor discovers that one of the company’s key contracts with its largest client contains a clause allowing termination the moment ownership changes — something nobody flagged during negotiations, because everyone was focused on the price, not the details. The result is a compensation dispute that drags on for over a year, and a partnership that was meant to build the company’s future instead ends up in litigation.
This is not an unusual case. In most acquisition deals we see, the real problem is rarely the final number. It’s in the details everyone assumes are “obvious” and so nobody bothers to put in writing, or in clauses copied from a template without anyone asking whether they actually fit this particular deal. Below are seven issues we see recur again and again — ones we wish every client knew before sitting down at the negotiating table, not after.
The Deal Is Won or Lost Before Anyone Reaches the Signing Table
Many parties treat the early negotiation stage as casual conversation that doesn’t need careful documentation, and put off legal rigor until after the price is agreed. This is exactly what tips the balance of power later on. The moment you make a verbal commitment to a term, or sign a term sheet without asking about its full legal effect, you’ve effectively given up negotiating leverage you won’t easily get back.
The question we always ask clients at this stage is simple: who holds the exclusivity right here, and what actually happens if the deal falls through? The answers to just these two questions, before anything else, often determine the entire trajectory of the deal.
The Exclusivity Clause: Legitimate Protection, or a Pressure Tool — Depending on How It’s Drafted
When an investor asks you to sign an exclusivity clause preventing you from negotiating with anyone else for a set period, the request itself is reasonable — they’re taking on due diligence costs and want assurance their effort won’t benefit a competitor. The problem starts when the period is disproportionately long relative to the size of the deal, or when it isn’t matched by a clear commitment from the other side to move seriously toward closing.
We’ve seen exclusivity used to freeze a founder for months with no real progress, time he could have spent in serious talks with another buyer. The solution isn’t to refuse the exclusivity clause — it’s to negotiate its duration and tie it to clear milestones that bind both sides, not just one.
Due Diligence Isn’t a Template You Fill In
Some parties treat due diligence as a formality — a generic checklist the other side answers, and that’s that. In reality, it’s the only process that reveals the gap between the company as it appears in the pitch deck and the company as it actually operates on the ground.
From the files we’ve worked on, these are the points most often overlooked: the company’s regulatory standing — commercial registration, sector-specific licenses, zakat obligations; existing contracts with key clients and whether they survive a change of ownership; labor obligations toward core employees; any legal dispute, even an early-stage one, that wasn’t disclosed; and finally, intellectual property and trademarks, which we frequently find registered in the founder’s personal name rather than the company’s — opening an entire set of complications after the deal closes.
What makes this dangerous is that its impact never shows up at signing. It shows up months later, when fixing the mistake costs far more than catching it early would have.
Warranty and Indemnity Clauses: The Line of Defense No One Notices Until They Need It
These are the clauses where the seller represents that certain facts about the company are accurate — that its financial position is as presented, that there are no hidden disputes, that its contracts are sound. When something later turns out not to be accurate, these clauses determine whether the buyer can actually claim compensation.
The recurring mistake comes from two opposite directions: either warranties that are vague and general enough to protect no one, or detailed warranties with no clear cap on compensation or time limit for claims — leaving the door open to an endless dispute. A deal without tightly drafted warranty clauses simply means one party is carrying risk it never actually agreed to — even if the contract looks fine on paper.
When Valuation Turns From a Number Into a Battle
It’s natural for valuation to be the biggest point of contention in any negotiation, but the surprising part is that most disputes don’t arise from the number itself — they arise from the absence of a clear mechanism for handling it if circumstances change. What happens if the company’s financial indicators shift between signing and closing? Is there a deferred-price or earn-out clause tying part of the price to future performance targets? And who resolves the disagreement if the parties can’t agree on fair value when it matters?
Deals that answer these questions upfront — even with just a sentence or two added to the contract — save themselves months of potential litigation down the line.
After Signing: The Shareholders’ Agreement No One Reads Carefully
The irony is that most of the negotiating effort goes into the price, while the document that will actually govern the founder’s relationship with the new partner for years — the shareholders’ agreement — sometimes gets signed after only a quick skim that doesn’t match its importance. This is the document that determines: if the founder becomes a minority shareholder, does he have a real right to object to major decisions? What are the future exit mechanisms — right of first refusal, tag-along rights, drag-along rights? How is influence distributed on the board? And what’s the scope of the non-compete clause — does it comply with Saudi law, or is it so broad it risks being unenforceable?
These aren’t secondary details to leave for later. They’re what actually determines whether the coming partnership will be healthy — or a permanent headache.
Why the Right Time to Bring In a Lawyer Is the First Moment, Not the Last
Many people assume a lawyer’s role begins when the final contract is drafted. But the decisions settled in the initial term sheet — even ones that look “non-binding” on paper — later become a ceiling that’s hard to move past, because the other side holds onto them as an “agreed principle.” In our experience with acquisition deals, the cases where legal counsel was involved from the very first moment were generally far less prone to costly surprises — simply because the hard questions were asked at the right time, not after it was too late.
Before You Sign
In the end, a good deal isn’t necessarily the one with the highest number — it’s the one whose details are tight enough that no party carries risk it never knowingly agreed to. If you’re currently negotiating an acquisition or share sale, it may be worth an hour of your time to review these seven points with legal counsel — before you reach a point where there’s no turning back.
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