Maximising value: a legal and strategic guide to preparing for investment

Ashfords is a partner for Growth Forge 2025, a business acceleration programme for ambitious tech companies. Learn more here.

Whether you’re looking to raise funding imminently or see investment as a longer-term milestone, priming and making your business ready for investment will likely be one of the most valuable steps you take. Investors will not just be evaluating your idea. They will also want to assess your execution, structure, market presence and risk profile. Much of that appraisal hinges on the foundations you build from day one.

This guide sets out how founders and early-stage business owners can increase their company’s appeal to investors, focusing not only on strategic planning, but also on legal hygiene, good contractual and business practices, and intellectual property (IP) protection; all of which have significant implications for company value.

Why “Investment Ready” matters – even if you’re not fundraising yet

High-growth companies understandably often focus their attention on product development, customer acquisition, and their route to market. But taking time to prepare your business structurally and legally for investment can pay dividends when the moment comes, because:

• You avoid unnecessary delays: If an investor is interested but you can’t provide clear answers or documentation, it creates friction and slows down – or in some cases, frustrates – deals.
• You increase confidence: Professionalism breeds confidence. If you can show that your house is in order, investors are more likely to believe in your ability to execute and you improve credibility.
• You may get better terms: Reduced legal and operational risk will improve your negotiating position, potentially driving better valuations and fewer restrictions.
• You signal ambition and foresight: Expert investors are looking for founders and businesses who think ahead. Investment readiness signals that you’re looking to scale, not merely survive.

What investors look for – beyond the pitch deck

Investors will want to see a compelling product, clear market demand, a talented team, and traction. But when they dig deeper they will also be looking for:

• Strong legal foundations: A clean company structure, well-maintained and current share registers, and cap tables.
• Clear IP ownership: No risk of future IP disputes, allegations of infringement or unclear rights. A well-managed IP portfolio can make a notable difference to a company’s valuation.
• Contracts and legal obligations: Formalised, maintained and recorded agreements with employees, contractors, suppliers, and customers.
• Compliance: Evidence of good governance and awareness of relevant legal obligations (e.g. data protection, employment law, cybersecurity).
• Well-organised documentation: Easy access to accurate, up-to-date company records.

Investors aren’t just buying into your idea, your products or your services, they’re also buying into the inherent risks of your business. The better prepared you are, the more those potential downsides can be managed.

Legal Checklist for Investment Readiness

Here’s a practical checklist of legal and structural tasks you can tackle to prepare for a fundraising round:

1. Formalise and record everything

Avoid relying on informal email chains or verbal understandings. All agreements, including those with co-founders, employees, consultants, customers, partners, early adopters or suppliers, should be documented in writing and properly executed.

That includes:

• Shareholder agreements
• Founders’ service agreements
• Employment agreements
• IP assignments and licences
• Consultancy agreements
• Commercial contracts – including customer agreements
• Confidentiality agreements and Non-disclosure agreements (NDA)
• Any share option agreements

2. Get your paperwork organised

Set up a structured folder system or online data room. Investors will want to review your documents during due diligence, and this process will be smoother and less disruptive to your day-to-day operations if you make it as easy and straightforward for your investors as possible. Your folders should be clearly named, logically ordered, and include, at a minimum:

• Corporate documents (e.g. articles of association, shareholder resolutions)
• Statutory books and cap table
• Employment and consultancy agreements
• IP registrations and licences
• Customer and supplier contracts
• Policies (e.g. data protection, cybersecurity, employment)

3. Run an internal due diligence exercise

Use a standard legal due diligence questionnaire and try to answer it yourself (Ashfords can help with this). This exercise will help you identify gaps or red flags and will prepare you to handle the real questions that investors will ask. It’s also good practice to keep this updated as your company grows.

4. Clean up your statutory books

These include your register of members (i.e. who owns shares in your business), directors, PSC (people with significant control) register, and other legal records. These are often neglected by early-stage companies but are critical to investors. Make sure these are accurate, complete, and aligned with what’s recorded at Companies House (and ensure you keep your filings up to date).

5. Protecting and recording your IP

For most early-stage tech companies, intellectual property is one of the most valuable assets. Yet many founders overlook the steps required to secure and retain ownership of it. Investors will want to see:

• Clear ownership: Make sure any IP is owned by your company; not by the founders in their personal capacity, not any contactors, and not any third party design agency or software developers. Use appropriate assignment clauses in employment and consultancy contracts to transfer all IP created for the business into company ownership.
• Registration where appropriate: Register trademarks, patents or design rights where they can give your business competitive advantage. Start with your brand name and logo, particularly if you’ve invested in building recognition. Even if you don’t register any IP right away, have a clear plan, and be ready to explain your thinking (and budget constraints) to investors.
• Watch domain names and social handles: It’s common for founders to register domain names or social media handles under their own names. This can raise flags during due diligence. Transfer ownership to the company as early as possible.

6. Demonstrate good contractual practices

Contracts are more than just legal paperwork; they evidence how you manage your business relationships. Investors will want to know that:

• Customers are locked in (where appropriate)
• Employees are tied in with IP and confidentiality clauses
• Contractors aren’t inadvertently holding rights to your IP or technology
• Founders have formalised their roles and responsibilities

Some tips:

• Use clear, concise agreements: clarity and enforceability matter.
• Avoid ambiguity: Investors worry about disputes, especially with early collaborators, advisers, or co-founders.
• Avoid “handshake” deals: Even with friends or family, get it in writing.

7. What to expect during due diligence

Once you have an investor lined up, they’ll want to look behind the curtain and investigate your business thoroughly. Due diligence usually covers three key areas:

Legal Due Diligence

You’ll be asked to provide documents and answer questions about:

• Company structure and governance
• Contracts and liabilities
• Employment and IP matters
• Any disputes or regulatory risks

Financial Due Diligence

This includes analysis of:

• Historical financials and forecasts
• Revenue recognition and accounting policies
• Capex and cashflow
• Tax position and liabilities

If your accounts are well-kept and your financial model makes sense, this process is smooth. If not, it can cause delays, or worse – imperil any investment.

Commercial Due Diligence

This varies depending on the size of the round, but typically includes:

• Market analysis
• Competitive landscape
• Customer concentration risk
• Go-to-market strategy

Protecting confidential information: Before sharing anything sensitive, especially pre-Term Sheet, ask potential investors to sign an NDA or confidentiality agreement. While many institutional investors may push back, having a standard NDA ready is a good sign of professionalism and caution.

8. Common pitfalls that scare off investors

Investors are used to assessing risk, but some issues are red flags that can delay or derail a deal. Watch out for:

• Unclear cap tables: Shareholding ambiguity is a major red flag.
• Unassigned IP: Founders or developers owning key IP instead of the company.
• Messy contracts: Missing signatures, unclear terms, or outdated agreements.
• Unpaid taxes or hidden liabilities: These raise trust issues immediately.
• Non-competes or other restrictions: Prior obligations of founders that might limit their ability to deliver.

If any of these apply to your business, be proactive. Clean them up before investors find them, or else be ready with a clear explanation.

9. The role of your lawyers

Having experienced lawyers involved in your investment process is not just a formality, but a necessity. Ashfords can help you:

• Prepare or review your data room
• Identify and fix red flag issues
• Draft and negotiate your Term Sheet and Shareholders’ Agreement
• Protect your interests without derailing the deal

Final Thought: Investment readiness is founder discipline

The process of getting “investment ready” mirrors the discipline needed to be a great founder – being organised, forward-thinking, commercial, and legally aware.

Even if you never raise capital, these steps will still pay off:

• You’ll build a stronger, more scalable business
• You’ll reduce the risk of disputes or regulatory issues
• You’ll build more trust with customers, partners and future employees

If you decide to raise, you’ll be ready to move fast, impress investors, and secure the best possible terms for your company.

Need Help?

If you’re a founder or early-stage business looking to prepare for investment – or just want to make sure your house is in order – it’s never too early to get advice. Contact the technology and digital transformation team at Ashfords if you’d like to discuss further.